Investors interested in Medical - Dental Supplies stocks are likely familiar with 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
LabCorp has a Zacks Rank of #2 (Buy), while Align Technology has a Zacks Rank of #5 (Strong Sell) 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 analyze a variety of traditional, tried-and-true metrics to help find companies 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 19.67, while ALGN has a forward P/E of 77.53. We also note that LH has a PEG ratio of 3.80. 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 7.21.
Another notable valuation metric for LH is its P/B ratio of 2.45. 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, ALGN has a P/B of 6.92.
Based on these metrics and many more, LH holds a Value grade of B, while ALGN has a Value grade of F.
LH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that LH is likely the superior value 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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