MDT or ESLOY: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical - Products sector might want to consider either Medtronic (MDT) or EssilorLuxottica Unsponsored ADR (ESLOY). But which of these two stocks presents investors with the better value opportunity right now? 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.
Right now, Medtronic is sporting a Zacks Rank of #2 (Buy), while EssilorLuxottica Unsponsored ADR 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 MDT has an improving earnings outlook. But this is just one piece of the puzzle 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 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.
MDT currently has a forward P/E ratio of 17.68, while ESLOY has a forward P/E of 34.64. We also note that MDT has a PEG ratio of 2.63. 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. ESLOY currently has a PEG ratio of 3.46.
Another notable valuation metric for MDT is its P/B ratio of 2.62. 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, ESLOY has a P/B of 3.38.
Based on these metrics and many more, MDT holds a Value grade of B, while ESLOY has a Value grade of D.
MDT stands above ESLOY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MDT is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
