Investors interested in Medical - Products stocks are likely familiar with GE HealthCare Technologies (GEHC) and Stryker (SYK). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
GE HealthCare Technologies and Stryker are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GEHC is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
GEHC currently has a forward P/E ratio of 16.81, while SYK has a forward P/E of 25.88. We also note that GEHC has a PEG ratio of 1.85. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SYK currently has a PEG ratio of 2.26.
Another notable valuation metric for GEHC is its P/B ratio of 3.68. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SYK has a P/B of 6.59.
These are just a few of the metrics contributing to GEHC's Value grade of B and SYK's Value grade of C.
GEHC has seen stronger estimate revision activity and sports more attractive valuation metrics than SYK, so it seems like value investors will conclude that GEHC is the superior option right now.
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GE HealthCare Technologies Inc. (GEHC): Free Stock Analysis Report Stryker Corporation (SYK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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