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Investors interested in Medical - Instruments stocks are likely familiar with Cantel Medical (CMD) and Abiomed (ABMD). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Cantel Medical has a Zacks Rank of #2 (Buy), while Abiomed has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CMD likely has seen a stronger improvement to its earnings outlook than ABMD has recently. 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 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.
CMD currently has a forward P/E ratio of 29.35, while ABMD has a forward P/E of 61.70. We also note that CMD has a PEG ratio of 1.54. 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. ABMD currently has a PEG ratio of 3.01.
Another notable valuation metric for CMD is its P/B ratio of 4.09. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ABMD has a P/B of 10.62.
These metrics, and several others, help CMD earn a Value grade of B, while ABMD has been given a Value grade of D.
CMD stands above ABMD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CMD is the superior value option right now.
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ABIOMED, Inc. (ABMD) : Free Stock Analysis Report
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