Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Labcorp (LH) or Straumann Holding AG (SAUHY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Labcorp and Straumann Holding AG are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 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.
LH currently has a forward P/E ratio of 15.44, while SAUHY has a forward P/E of 31.52. We also note that LH has a PEG ratio of 1.57. 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. SAUHY currently has a PEG ratio of 2.11.
Another notable valuation metric for LH is its P/B ratio of 2.50. 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, SAUHY has a P/B of 9.09.
Based on these metrics and many more, LH holds a Value grade of A, while SAUHY has a Value grade of C.
Both LH and SAUHY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LH is the superior value option right now.
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Labcorp (LH): Free Stock Analysis Report Straumann Holding AG (SAUHY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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