Investors with an interest in Medical - Products stocks have likely encountered both Envista (NVST) and Abbott (ABT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Envista has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NVST likely has seen a stronger improvement to its earnings outlook than ABT has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NVST currently has a forward P/E ratio of 18.67, while ABT has a forward P/E of 19.25. We also note that NVST has a PEG ratio of 1.05. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ABT currently has a PEG ratio of 1.74.
Another notable valuation metric for NVST is its P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ABT has a P/B of 3.71.
Based on these metrics and many more, NVST holds a Value grade of B, while ABT has a Value grade of C.
NVST sticks out from ABT in both our Zacks Rank and Style Scores models, so value investors will likely feel that NVST is the better option right now.
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Envista Holdings Corporation (NVST): Free Stock Analysis Report Abbott Laboratories (ABT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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