Investors looking for stocks in the Medical - Instruments sector might want to consider either Globus Medical (GMED) or Penumbra (PEN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Globus Medical has a Zacks Rank of #2 (Buy), while Penumbra has a Zacks Rank of #3 (Hold). This means that GMED's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
GMED currently has a forward P/E ratio of 22.70, while PEN has a forward P/E of 70.52. We also note that GMED has a PEG ratio of 1.44. 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. PEN currently has a PEG ratio of 2.20.
Another notable valuation metric for GMED is its P/B ratio of 2.74. 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, PEN has a P/B of 10.29.
Based on these metrics and many more, GMED holds a Value grade of B, while PEN has a Value grade of D.
GMED stands above PEN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GMED is the superior value option right now.
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Globus Medical, Inc. (GMED): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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