BAX vs. BSX: Which Stock Is the Better Value Option?
Investors interested in Medical - Products stocks are likely familiar with Baxter International (BAX) and Boston Scientific (BSX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Baxter International has a Zacks Rank of #2 (Buy), while Boston Scientific has a Zacks Rank of #3 (Hold). This means that BAX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
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.
BAX currently has a forward P/E ratio of 26.04, while BSX has a forward P/E of 27.41. We also note that BAX has a PEG ratio of 2.03. 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. BSX currently has a PEG ratio of 2.56.
Another notable valuation metric for BAX is its P/B ratio of 5.73. 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, BSX has a P/B of 6.32.
These metrics, and several others, help BAX earn a Value grade of B, while BSX has been given a Value grade of D.
BAX 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 BAX is likely the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.