U.S. markets open in 8 hours 51 minutes
  • S&P Futures

    4,432.25
    -0.75 (-0.02%)
     
  • Dow Futures

    34,782.00
    +39.00 (+0.11%)
     
  • Nasdaq Futures

    15,156.25
    -38.50 (-0.25%)
     
  • Russell 2000 Futures

    2,282.20
    +5.20 (+0.23%)
     
  • Crude Oil

    76.10
    +0.65 (+0.86%)
     
  • Gold

    1,749.80
    -2.20 (-0.13%)
     
  • Silver

    22.63
    -0.06 (-0.28%)
     
  • EUR/USD

    1.1697
    -0.0004 (-0.04%)
     
  • 10-Yr Bond

    1.4840
    0.0000 (0.00%)
     
  • Vix

    18.76
    +1.01 (+5.69%)
     
  • GBP/USD

    1.3711
    +0.0007 (+0.05%)
     
  • USD/JPY

    111.2000
    +0.2220 (+0.20%)
     
  • BTC-USD

    42,693.45
    -1,325.37 (-3.01%)
     
  • CMC Crypto 200

    1,057.62
    -43.90 (-3.99%)
     
  • FTSE 100

    7,063.40
    +11.92 (+0.17%)
     
  • Nikkei 225

    30,114.76
    -125.30 (-0.41%)
     

PDCO or ALGN: Which Is the Better Value Stock Right Now?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of Patterson Cos. (PDCO) and Align Technology (ALGN). 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 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.

Right now, both Patterson Cos. and Align Technology are sporting a Zacks Rank of # 2 (Buy). 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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PDCO currently has a forward P/E ratio of 16.11, while ALGN has a forward P/E of 108.73. We also note that PDCO has a PEG ratio of 1.69. 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. ALGN currently has a PEG ratio of 5.95.

Another notable valuation metric for PDCO is its P/B ratio of 3.38. 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, ALGN has a P/B of 13.11.

Based on these metrics and many more, PDCO holds a Value grade of B, while ALGN has a Value grade of F.

Both PDCO and ALGN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PDCO 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
 
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
 
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.