Investors interested in Medical - Dental Supplies stocks are likely familiar with McKesson (MCK) and Cooper Cos. (COO). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both McKesson and Cooper Cos. have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MCK currently has a forward P/E ratio of 9.45, while COO has a forward P/E of 21.27. We also note that MCK has a PEG ratio of 1.34. 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. COO currently has a PEG ratio of 1.99.
Another notable valuation metric for MCK is its P/B ratio of 3.86. 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 3.93.
These metrics, and several others, help MCK earn a Value grade of A, while COO has been given 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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