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MCK or CNMD: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of McKesson (MCK) and Conmed (CNMD). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, McKesson has a Zacks Rank of #2 (Buy), while Conmed has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MCK likely has seen a stronger improvement to its earnings outlook than CNMD has recently. However, value investors will care about much more than just this.

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.

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.

MCK currently has a forward P/E ratio of 10.69, while CNMD has a forward P/E of 52.92. We also note that MCK has a PEG ratio of 1.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CNMD currently has a PEG ratio of 4.89.

Another notable valuation metric for MCK is its P/B ratio of 4.59. 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, CNMD has a P/B of 4.69.

Based on these metrics and many more, MCK holds a Value grade of A, while CNMD has a Value grade of C.

MCK stands above CNMD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MCK is the superior value option right now.


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McKesson Corporation (MCK) : Free Stock Analysis Report
 
CONMED Corporation (CNMD) : Free Stock Analysis Report
 
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