Investors with an interest in Medical - Products stocks have likely encountered both Hill-Rom (HRC) and Boston Scientific (BSX). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Hill-Rom is sporting a Zacks Rank of #2 (Buy), while Boston Scientific has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HRC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
HRC currently has a forward P/E ratio of 19.65, while BSX has a forward P/E of 24.50. We also note that HRC has a PEG ratio of 1.77. 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. BSX currently has a PEG ratio of 2.15.
Another notable valuation metric for HRC is its P/B ratio of 4.51. 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, BSX has a P/B of 6.32.
These are just a few of the metrics contributing to HRC's Value grade of B and BSX's Value grade of C.
HRC 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 HRC is likely the superior value option right now.
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Hill-Rom Holdings, Inc. (HRC) : Free Stock Analysis Report
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