Investors with an interest in Medical - Dental Supplies stocks have likely encountered both The Cooper Companies (COO) and Merit Medical (MMSI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
The Cooper Companies has a Zacks Rank of #2 (Buy), while Merit Medical has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that COO likely has seen a stronger improvement to its earnings outlook than MMSI has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
COO currently has a forward P/E ratio of 17.56, while MMSI has a forward P/E of 22.36. We also note that COO has a PEG ratio of 2.26. 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. MMSI currently has a PEG ratio of 2.32.
Another notable valuation metric for COO is its P/B ratio of 1.89. 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, MMSI has a P/B of 3.23.
These metrics, and several others, help COO earn a Value grade of B, while MMSI has been given a Value grade of C.
COO has seen stronger estimate revision activity and sports more attractive valuation metrics than MMSI, so it seems like value investors will conclude that COO is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
