Investors interested in Medical - Products stocks are likely familiar with Prestige Consumer Healthcare (PBH) and Stryker (SYK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Prestige Consumer Healthcare and Stryker are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PBH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
PBH currently has a forward P/E ratio of 18.73, while SYK has a forward P/E of 32.32. We also note that PBH has a PEG ratio of 2.34. 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. SYK currently has a PEG ratio of 2.94.
Another notable valuation metric for PBH is its P/B ratio of 2.38. 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, SYK has a P/B of 7.37.
These are just a few of the metrics contributing to PBH's Value grade of B and SYK's Value grade of C.
PBH has seen stronger estimate revision activity and sports more attractive valuation metrics than SYK, so it seems like value investors will conclude that PBH is the superior option right now.
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Stryker Corporation (SYK) : 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.
