Investors interested in Medical - Products stocks are likely familiar with NuVasive (NUVA) and ResMed (RMD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both NuVasive and ResMed are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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 29.86, while RMD has a forward P/E of 35.78. We also note that NUVA has a PEG ratio of 2.73. 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. RMD currently has a PEG ratio of 2.76.
Another notable valuation metric for NUVA is its P/B ratio of 4.21. 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, RMD has a P/B of 9.81.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NuVasive, Inc. (NUVA) : Free Stock Analysis Report
ResMed Inc. (RMD) : Free Stock Analysis Report
To read this article on Zacks.com click here.