HLN vs. SYK: Which Stock Is the Better Value Option?

Investors interested in Medical - Products stocks are likely familiar with Haleon PLC Sponsored ADR (HLN) and Stryker (SYK). 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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Haleon PLC Sponsored ADR has a Zacks Rank of #2 (Buy), while Stryker has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HLN is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

HLN currently has a forward P/E ratio of 21.28, while SYK has a forward P/E of 29.60. We also note that HLN has a PEG ratio of 2.92. 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. SYK currently has a PEG ratio of 2.98.

Another notable valuation metric for HLN is its P/B ratio of 2.24. 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, SYK has a P/B of 7.21.

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

HLN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HLN is likely the superior value option right now.

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

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