Investors interested in stocks from the Medical - Products sector have probably already heard of Prestige Consumer Healthcare (PBH) 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Prestige Consumer Healthcare has a Zacks Rank of #2 (Buy), while EssilorLuxottica Unsponsored ADR 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 PBH has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
PBH currently has a forward P/E ratio of 18.23, while ESLOY has a forward P/E of 34.49. We also note that PBH has a PEG ratio of 2.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ESLOY currently has a PEG ratio of 3.60.
Another notable valuation metric for PBH is its P/B ratio of 2.35. 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, ESLOY has a P/B of 2.92.
These metrics, and several others, help PBH earn a Value grade of B, while ESLOY has been given a Value grade of C.
PBH stands above ESLOY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PBH is the superior value option right now.
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Prestige Consumer Healthcare Inc. (PBH): 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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