Investors interested in Medical - Dental Supplies stocks are likely familiar with Patterson Cos. (PDCO) and Merit Medical (MMSI). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Patterson Cos. and Merit Medical are sporting 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. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PDCO currently has a forward P/E ratio of 17.27, while MMSI has a forward P/E of 35.30. We also note that PDCO has a PEG ratio of 1.90. 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. MMSI currently has a PEG ratio of 2.80.
Another notable valuation metric for PDCO is its P/B ratio of 3.10. 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, MMSI has a P/B of 3.26.
These metrics, and several others, help PDCO earn a Value grade of B, while MMSI has been given a Value grade of C.
Both PDCO and MMSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PDCO is the superior value option right now.
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Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
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