Investors looking for stocks in the Medical - Instruments sector might want to consider either Fresenius (FMS) or RxSight, Inc. (RXST). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Fresenius has a Zacks Rank of #1 (Strong Buy), while RxSight, Inc. has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FMS is likely seeing its earnings outlook improve to a greater extent. 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.
FMS currently has a forward P/E ratio of 12.70, while RXST has a forward P/E of 1,957.50. We also note that FMS has a PEG ratio of 0.66. 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. RXST currently has a PEG ratio of 51.65.
Another notable valuation metric for FMS is its P/B ratio of 1.01. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, RXST has a P/B of 1.9.
Based on these metrics and many more, FMS holds a Value grade of B, while RXST has a Value grade of D.
FMS stands above RXST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FMS is the superior value option right now.
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Fresenius Medical Care AG & Co. KGaA (FMS): Free Stock Analysis Report RxSight, Inc. (RXST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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