Investors with an interest in Medical - Dental Supplies stocks have likely encountered both Dentsply International (XRAY) and Align Technology (ALGN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Dentsply International has a Zacks Rank of #2 (Buy), while Align Technology 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 XRAY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
XRAY currently has a forward P/E ratio of 23.35, while ALGN has a forward P/E of 50.74. We also note that XRAY has a PEG ratio of 2.01. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALGN currently has a PEG ratio of 2.30.
Another notable valuation metric for XRAY is its P/B ratio of 2.54. 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, ALGN has a P/B of 16.51.
Based on these metrics and many more, XRAY holds a Value grade of B, while ALGN has a Value grade of D.
XRAY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that XRAY is likely the superior value option right now.
Click to get this free report DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report Align Technology, Inc. (ALGN) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research