Investors interested in stocks from the Medical - Instruments sector have probably already heard of Fresenius (FMS) and SONOVA HOLDING (SONVY). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Fresenius has a Zacks Rank of #1 (Strong Buy), while SONOVA HOLDING has a Zacks Rank of #5 (Strong Sell). This means that FMS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
FMS currently has a forward P/E ratio of 11.99, while SONVY has a forward P/E of 23.37. We also note that FMS has a PEG ratio of 0.63. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SONVY currently has a PEG ratio of 2.28.
Another notable valuation metric for FMS is its P/B ratio of 0.95. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SONVY has a P/B of 5.75.
These metrics, and several others, help FMS earn a Value grade of B, while SONVY has been given a Value grade of D.
FMS 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 FMS is likely the superior value option right now.
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See Stocks Now >>Fresenius Medical Care AG & Co. KGaA (FMS) : Free Stock Analysis Report
SONOVA HOLDING (SONVY) : Free Stock Analysis Report
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.
