Investors with an interest in Medical - Dental Supplies stocks have likely encountered both McKesson (MCK) and Cooper Cos. (COO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, both McKesson and Cooper Cos. are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
MCK currently has a forward P/E ratio of 8.13, while COO has a forward P/E of 21.94. We also note that MCK has a PEG ratio of 1.32. 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. COO currently has a PEG ratio of 1.99.
Another notable valuation metric for MCK is its P/B ratio of 3.58. 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, COO has a P/B of 4.06.
Based on these metrics and many more, MCK holds a Value grade of A, while COO has a Value grade of D.
Both MCK and COO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MCK is the superior value option right now.
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McKesson Corporation (MCK) : Free Stock Analysis Report
The Cooper Companies, Inc. (COO) : Free Stock Analysis Report
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