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TMO vs. EW: Which Stock Is the Better Value Option?

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·2 min read
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Investors interested in stocks from the Medical - Instruments sector have probably already heard of Thermo Fisher Scientific (TMO) and Edwards Lifesciences (EW). 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.

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.

Thermo Fisher Scientific has a Zacks Rank of #2 (Buy), while Edwards Lifesciences has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TMO 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.

TMO currently has a forward P/E ratio of 28.08, while EW has a forward P/E of 42.10. We also note that TMO has a PEG ratio of 1.87. 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. EW currently has a PEG ratio of 2.66.

Another notable valuation metric for TMO is its P/B ratio of 5.56. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EW has a P/B of 12.65.

These are just a few of the metrics contributing to TMO's Value grade of B and EW's Value grade of C.

TMO sticks out from EW in both our Zacks Rank and Style Scores models, so value investors will likely feel that TMO is the better option right now.


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Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
 
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Zacks Investment Research