Investors interested in Medical - Products stocks are likely familiar with Envista (NVST) and EssilorLuxottica Unsponsored ADR (ESLOY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Envista is sporting a Zacks Rank of #2 (Buy), while EssilorLuxottica Unsponsored ADR has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NVST has an improving earnings outlook. But this is just one piece of the puzzle 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.
NVST currently has a forward P/E ratio of 19.86, while ESLOY has a forward P/E of 28.16. We also note that NVST has a PEG ratio of 1.91. 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. ESLOY currently has a PEG ratio of 2.99.
Another notable valuation metric for NVST is its P/B ratio of 1.48. 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, ESLOY has a P/B of 2.67.
These metrics, and several others, help NVST earn a Value grade of B, while ESLOY has been given a Value grade of D.
NVST is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NVST is likely the superior value option right now.
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Envista Holdings Corporation (NVST): Free Stock Analysis Report EssilorLuxottica Unsponsored ADR (ESLOY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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