Investors interested in stocks from the Medical - Products sector have probably already heard of Hill-Rom (HRC) and Boston Scientific (BSX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Hill-Rom and Boston Scientific are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HRC is likely seeing its earnings outlook improve to a greater extent. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
HRC currently has a forward P/E ratio of 20.76, while BSX has a forward P/E of 25.33. We also note that HRC has a PEG ratio of 1.78. 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. BSX currently has a PEG ratio of 2.22.
Another notable valuation metric for HRC is its P/B ratio of 4.88. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BSX has a P/B of 6.53.
Based on these metrics and many more, HRC holds a Value grade of B, while BSX has a Value grade of C.
HRC stands above BSX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HRC is the superior value option right now.
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Hill-Rom Holdings, Inc. (HRC) : Free Stock Analysis Report
Boston Scientific Corporation (BSX) : Free Stock Analysis Report
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