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HOLX vs. TCMD: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Medical - Instruments sector have probably already heard of Hologic (HOLX) and Tactile Systems Technology (TCMD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Hologic and Tactile Systems Technology are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

HOLX currently has a forward P/E ratio of 19.54, while TCMD has a forward P/E of 105.75. We also note that HOLX has a PEG ratio of 2.18. 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. TCMD currently has a PEG ratio of 5.29.

Another notable valuation metric for HOLX is its P/B ratio of 6.38. 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, TCMD has a P/B of 11.24.

These are just a few of the metrics contributing to HOLX's Value grade of B and TCMD's Value grade of D.

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


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Hologic, Inc. (HOLX) : Free Stock Analysis Report
 
Tactile Systems Technology, Inc. (TCMD) : Free Stock Analysis Report
 
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