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Investors with an interest in Medical - Products stocks have likely encountered both Hill-Rom (HRC) and SurModics (SRDX). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Hill-Rom is sporting a Zacks Rank of #2 (Buy), while SurModics has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that HRC likely has seen a stronger improvement to its earnings outlook than SRDX has recently. But this is only part of the picture for value investors.
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.
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.
HRC currently has a forward P/E ratio of 21.63, while SRDX has a forward P/E of 247.77. We also note that HRC has a PEG ratio of 2.57. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SRDX currently has a PEG ratio of 24.78.
Another notable valuation metric for HRC is its P/B ratio of 4.77. 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, SRDX has a P/B of 5.37.
Based on these metrics and many more, HRC holds a Value grade of B, while SRDX has a Value grade of C.
HRC stands above SRDX 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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HillRom Holdings, Inc. (HRC) : Free Stock Analysis Report
Surmodics, Inc. (SRDX) : Free Stock Analysis Report
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