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CAH or ALGN: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Medical - Dental Supplies stocks are likely familiar with Cardinal Health (CAH) and Align Technology (ALGN). But which of these two companies is the best option for those looking for undervalued stocks? 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 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 Cardinal Health and Align Technology are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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.

CAH currently has a forward P/E ratio of 10.13, while ALGN has a forward P/E of 51.63. We also note that CAH has a PEG ratio of 1.64. 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. ALGN currently has a PEG ratio of 2.34.

Another notable valuation metric for CAH is its P/B ratio of 16.57. 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, ALGN has a P/B of 16.80.

These are just a few of the metrics contributing to CAH's Value grade of A and ALGN's Value grade of C.

Both CAH and ALGN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CAH is the superior value option right now.


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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
 
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
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