ALGN vs. SAUHY: Which Stock Is the Better Value Option?

Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Align Technology (ALGN) 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 Align Technology 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 just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

ALGN currently has a forward P/E ratio of 18.33, while SAUHY has a forward P/E of 30.67. We also note that ALGN has a PEG ratio of 1.63. 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. SAUHY currently has a PEG ratio of 2.14.

Another notable valuation metric for ALGN is its P/B ratio of 3.65. 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, SAUHY has a P/B of 8.9.

These metrics, and several others, help ALGN earn a Value grade of B, while SAUHY has been given a Value grade of D.

Both ALGN and SAUHY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ALGN is the superior value option right now.

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

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