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FMS vs. ABMD: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors interested in stocks from the Medical - Instruments sector have probably already heard of Fresenius (FMS) and Abiomed (ABMD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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.

Fresenius has a Zacks Rank of #2 (Buy), while Abiomed has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FMS is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

FMS currently has a forward P/E ratio of 18.98, while ABMD has a forward P/E of 93.01. We also note that FMS has a PEG ratio of 2.55. 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. ABMD currently has a PEG ratio of 4.77.

Another notable valuation metric for FMS is its P/B ratio of 1.83. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ABMD has a P/B of 12.63.

Based on these metrics and many more, FMS holds a Value grade of A, while ABMD has a Value grade of D.

FMS stands above ABMD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FMS is the superior value option right now.


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Fresenius Medical Care AG Co. KGaA (FMS) : Free Stock Analysis Report
 
ABIOMED, Inc. (ABMD) : Free Stock Analysis Report
 
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Zacks Investment Research