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NUVA or RMD: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in stocks from the Medical - Products sector have probably already heard of NuVasive (NUVA) and ResMed (RMD). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

NuVasive and ResMed are both sporting a Zacks Rank of # 2 (Buy) right now. 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.

NUVA currently has a forward P/E ratio of 30.03, while RMD has a forward P/E of 36.28. We also note that NUVA has a PEG ratio of 2.75. 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. RMD currently has a PEG ratio of 2.80.

Another notable valuation metric for NUVA is its P/B ratio of 4.23. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RMD has a P/B of 9.94.

These metrics, and several others, help NUVA earn a Value grade of B, while RMD has been given a Value grade of C.

Both NUVA and RMD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NUVA is the superior value option right now.


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NuVasive, Inc. (NUVA) : Free Stock Analysis Report
 
ResMed Inc. (RMD) : Free Stock Analysis Report
 
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