VTRS vs. AVTR: Which Stock Is the Better Value Option?
Investors looking for stocks in the Medical Services sector might want to consider either Viatris (VTRS) or Avantor, Inc. (AVTR). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Viatris and Avantor, Inc. have a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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 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.
VTRS currently has a forward P/E ratio of 7.01, while AVTR has a forward P/E of 19.51. We also note that VTRS has a PEG ratio of 1.92. 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. AVTR currently has a PEG ratio of 11.93.
Another notable valuation metric for VTRS is its P/B ratio of 1.44. 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, AVTR has a P/B of 1.9.
These are just a few of the metrics contributing to VTRS's Value grade of A and AVTR's Value grade of C.
Both VTRS and AVTR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that VTRS is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
