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

Zacks Equity Research
·2 min read

Investors interested in stocks from the Medical - Instruments sector have probably already heard of Olympus Corp. (OCPNY) and Edwards Lifesciences (EW). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Olympus Corp. has a Zacks Rank of #2 (Buy), while Edwards Lifesciences 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 OCPNY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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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.

OCPNY currently has a forward P/E ratio of 22.47, while EW has a forward P/E of 36.49. We also note that OCPNY has a PEG ratio of 1.83. 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. EW currently has a PEG ratio of 2.63.

Another notable valuation metric for OCPNY is its P/B ratio of 5.71. 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 9.96.

These metrics, and several others, help OCPNY earn a Value grade of B, while EW has been given a Value grade of C.

OCPNY has seen stronger estimate revision activity and sports more attractive valuation metrics than EW, so it seems like value investors will conclude that OCPNY is the superior option right now.


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Zacks Investment Research