Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of LabCorp (LH) and Align Technology (ALGN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
LabCorp and Align Technology are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LH has an improving earnings 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.
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.
LH currently has a forward P/E ratio of 16.70, while ALGN has a forward P/E of 90.33. We also note that LH has a PEG ratio of 2.76. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALGN currently has a PEG ratio of 8.40.
Another notable valuation metric for LH is its P/B ratio of 2.39. 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, ALGN has a P/B of 7.80.
These are just a few of the metrics contributing to LH's Value grade of B and ALGN's Value grade of D.
LH sticks out from ALGN in both our Zacks Rank and Style Scores models, so value investors will likely feel that LH is the better option right now.
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Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
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