Investors looking for stocks in the Medical - Instruments sector might want to consider either Globus Medical (GMED) or Masimo (MASI). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Globus Medical and Masimo have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GMED currently has a forward P/E ratio of 22.92, while MASI has a forward P/E of 30.36. We also note that GMED has a PEG ratio of 1.45. 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. MASI currently has a PEG ratio of 1.77.
Another notable valuation metric for GMED is its P/B ratio of 2.77. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MASI has a P/B of 11.61.
Based on these metrics and many more, GMED holds a Value grade of B, while MASI has a Value grade of D.
Both GMED and MASI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GMED is the superior value option right now.
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Globus Medical, Inc. (GMED): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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