KMDA or TECH: Which Is the Better Value Stock Right Now?

Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Kamada (KMDA) and Techne (TECH). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Kamada has a Zacks Rank of #2 (Buy), while Techne has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KMDA has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

KMDA currently has a forward P/E ratio of 18.08, while TECH has a forward P/E of 30.35. We also note that KMDA has a PEG ratio of 0.72. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TECH currently has a PEG ratio of 3.44.

Another notable valuation metric for KMDA is its P/B ratio of 1.84. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TECH has a P/B of 4.66.

These are just a few of the metrics contributing to KMDA's Value grade of A and TECH's Value grade of D.

KMDA sticks out from TECH in both our Zacks Rank and Style Scores models, so value investors will likely feel that KMDA is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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