Investors interested in stocks from the Medical - Products sector have probably already heard of Zimmer Biomet (ZBH) and LeMaitre Vascular (LMAT). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Zimmer Biomet is sporting a Zacks Rank of #2 (Buy), while LeMaitre Vascular has a Zacks Rank of #3 (Hold). This means that ZBH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
ZBH currently has a forward P/E ratio of 16.72, while LMAT has a forward P/E of 46.56. We also note that ZBH has a PEG ratio of 3.37. 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. LMAT currently has a PEG ratio of 4.66.
Another notable valuation metric for ZBH is its P/B ratio of 1.96. 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, LMAT has a P/B of 4.58.
These are just a few of the metrics contributing to ZBH's Value grade of B and LMAT's Value grade of C.
ZBH stands above LMAT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ZBH is the superior value option right now.
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Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
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