BAX vs. SYK: Which Stock Is the Better Value Option?
Investors looking for stocks in the Medical - Products sector might want to consider either Baxter International (BAX) or 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.
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 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, both Baxter International and Stryker are holding a Zacks Rank of # 2 (Buy). 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BAX currently has a forward P/E ratio of 12.60, while SYK has a forward P/E of 25.26. We also note that BAX has a PEG ratio of 2.28. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SYK currently has a PEG ratio of 2.53.
Another notable valuation metric for BAX is its P/B ratio of 2.89. 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, SYK has a P/B of 5.73.
These are just a few of the metrics contributing to BAX's Value grade of A and SYK's Value grade of C.
Both BAX and SYK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BAX is the superior value option right now.
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Baxter International Inc. (BAX) : Free Stock Analysis Report
Stryker Corporation (SYK) : Free Stock Analysis Report
