Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Henry Schein (HSIC) or West Pharmaceutical Services (WST). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Currently, Henry Schein has a Zacks Rank of #2 (Buy), while West Pharmaceutical Services has a Zacks Rank of #3 (Hold). This means that HSIC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
HSIC currently has a forward P/E ratio of 20.65, while WST has a forward P/E of 43.19. We also note that HSIC has a PEG ratio of 2.50. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WST currently has a PEG ratio of 3.77.
Another notable valuation metric for HSIC is its P/B ratio of 3.11. 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, WST has a P/B of 6.67.
These are just a few of the metrics contributing to HSIC's Value grade of B and WST's Value grade of D.
HSIC stands above WST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HSIC is the superior value option right now.
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Henry Schein, Inc. (HSIC) : Free Stock Analysis Report
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