Investors interested in Medical - Dental Supplies stocks are likely familiar with Patterson Cos. (PDCO) and West Pharmaceutical Services (WST). 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, both Patterson Cos. and West Pharmaceutical Services are holding 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 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 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 16.44, while WST has a forward P/E of 45.06. We also note that PDCO has a PEG ratio of 2.55. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WST currently has a PEG ratio of 3.22.
Another notable valuation metric for PDCO is its P/B ratio of 1.53. 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, WST has a P/B of 7.75.
These are just a few of the metrics contributing to PDCO's Value grade of A and WST's Value grade of D.
Both PDCO and WST 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
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