NVST vs. ABT: Which Stock Is the Better Value Option?

Investors with an interest in Medical - Products stocks have likely encountered both Envista (NVST) and Abbott (ABT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Envista has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #3 (Hold). 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 factor that value investors are interested in.

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.

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.

NVST currently has a forward P/E ratio of 18.81, while ABT has a forward P/E of 26.65. We also note that NVST has a PEG ratio of 1.23. 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. ABT currently has a PEG ratio of 2.61.

Another notable valuation metric for NVST is its P/B ratio of 1.08. 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, ABT has a P/B of 4.87.

These metrics, and several others, help NVST earn a Value grade of B, while ABT has been given a Value grade of C.

NVST sticks out from ABT in both our Zacks Rank and Style Scores models, so value investors will likely feel that NVST is the better option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research