Investors looking for stocks in the Medical - Instruments sector might want to consider either Integer (ITGR) or Edwards Lifesciences (EW). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Integer has a Zacks Rank of #2 (Buy), while Edwards Lifesciences has a Zacks Rank of #3 (Hold). This means that ITGR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
ITGR currently has a forward P/E ratio of 18.47, while EW has a forward P/E of 28.24. We also note that ITGR has a PEG ratio of 1.52. 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. EW currently has a PEG ratio of 3.88.
Another notable valuation metric for ITGR is its P/B ratio of 1.84. 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, EW has a P/B of 6.78.
These metrics, and several others, help ITGR earn a Value grade of B, while EW has been given a Value grade of D.
ITGR has seen stronger estimate revision activity and sports more attractive valuation metrics than EW, so it seems like value investors will conclude that ITGR is the superior option right now.
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