PDCO or MMSI: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of Patterson Cos. (PDCO) and Merit Medical (MMSI). 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.
Currently, Patterson Cos. has a Zacks Rank of #1 (Strong Buy), while Merit Medical has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PDCO is likely seeing its earnings outlook improve to a greater extent. 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.
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.
PDCO currently has a forward P/E ratio of 12.93, while MMSI has a forward P/E of 28.20. We also note that PDCO has a PEG ratio of 1.41. 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. MMSI currently has a PEG ratio of 2.56.
Another notable valuation metric for PDCO is its P/B ratio of 2.82. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MMSI has a P/B of 4.
Based on these metrics and many more, PDCO holds a Value grade of B, while MMSI has a Value grade of C.
PDCO has seen stronger estimate revision activity and sports more attractive valuation metrics than MMSI, so it seems like value investors will conclude that PDCO is the superior option right now.
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Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
