HRC or BAX: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical - Products sector have probably already heard of Hill-Rom (HRC) and Baxter International (BAX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Hill-Rom and Baxter International are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HRC'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 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.
HRC currently has a forward P/E ratio of 18.35, while BAX has a forward P/E of 25.76. We also note that HRC has a PEG ratio of 1.83. 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. BAX currently has a PEG ratio of 2.01.
Another notable valuation metric for HRC is its P/B ratio of 4.16. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BAX has a P/B of 5.66.
These are just a few of the metrics contributing to HRC's Value grade of B and BAX's Value grade of C.
HRC stands above BAX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HRC is the superior value option right now.
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Hill-Rom Holdings, Inc. (HRC): Free Stock Analysis Report
Baxter International Inc. (BAX): Free Stock Analysis Report
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