Investors looking for stocks in the Medical - Products sector might want to consider either GE HealthCare Technologies (GEHC) or 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both GE HealthCare Technologies and Stryker have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
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.
GEHC currently has a forward P/E ratio of 14.64, while SYK has a forward P/E of 22.69. We also note that GEHC has a PEG ratio of 1.61. 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 1.98.
Another notable valuation metric for GEHC is its P/B ratio of 3.21. 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, SYK has a P/B of 5.77.
Based on these metrics and many more, GEHC holds a Value grade of B, while SYK has a Value grade of C.
Both GEHC and SYK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GEHC is the superior value option right now.
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Stryker Corporation (SYK) : 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.
