Investors looking for stocks in the Medical Services sector might want to consider either Icon PLC (ICLR) or Charles River Laboratories (CRL). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Icon PLC has a Zacks Rank of #2 (Buy), while Charles River Laboratories has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ICLR has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
ICLR currently has a forward P/E ratio of 20.89, while CRL has a forward P/E of 22.39. We also note that ICLR has a PEG ratio of 1.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CRL currently has a PEG ratio of 1.93.
Another notable valuation metric for ICLR is its P/B ratio of 2.79. 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, CRL has a P/B of 3.51.
These metrics, and several others, help ICLR earn a Value grade of B, while CRL has been given a Value grade of C.
ICLR stands above CRL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ICLR is the superior value option right now.
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Charles River Laboratories International, Inc. (CRL) : Free Stock Analysis Report
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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.
