Investors looking for stocks in the Medical - Products sector might want to consider either PetIQ (PETQ) or Boston Scientific (BSX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
PetIQ and Boston Scientific are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PETQ has 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.
PETQ currently has a forward P/E ratio of 22.48, while BSX has a forward P/E of 26.07. We also note that PETQ has a PEG ratio of 0.90. 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. BSX currently has a PEG ratio of 2.43.
Another notable valuation metric for PETQ is its P/B ratio of 2.27. 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, BSX has a P/B of 6.01.
These are just a few of the metrics contributing to PETQ's Value grade of B and BSX's Value grade of D.
PETQ sticks out from BSX in both our Zacks Rank and Style Scores models, so value investors will likely feel that PETQ is the better option right now.
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