Investors looking for stocks in the Medical - Instruments sector might want to consider either SONOVA HOLDING (SONVY) or Idexx Laboratories (IDXX). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Right now, SONOVA HOLDING is sporting a Zacks Rank of #2 (Buy), while Idexx Laboratories has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SONVY has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SONVY currently has a forward P/E ratio of 20.72, while IDXX has a forward P/E of 43.44. We also note that SONVY has a PEG ratio of 3.14. 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. IDXX currently has a PEG ratio of 3.84.
Another notable valuation metric for SONVY is its P/B ratio of 4.94. 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, IDXX has a P/B of 31.37.
Based on these metrics and many more, SONVY holds a Value grade of B, while IDXX has a Value grade of D.
SONVY stands above IDXX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SONVY is the superior value option right now.
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SONOVA HOLDING (SONVY): Free Stock Analysis Report IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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