Investors looking for stocks in the Medical – Products sector might want to consider either Prestige Consumer Healthcare (PBH – Free Report) or Boston Scientific (BSX – Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Prestige Consumer Healthcare and Boston Scientific are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PBH currently has a forward P/E ratio of 17.66, while BSX has a forward P/E of 36.85. We also note that PBH has a PEG ratio of 2.21. 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. BSX currently has a PEG ratio of 2.67.
Another notable valuation metric for PBH is its P/B ratio of 2.24. 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, BSX has a P/B of 6.38.
These are just a few of the metrics contributing to PBH’s Value grade of B and BSX’s Value grade of C.
Both PBH and BSX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PBH is the superior value option right now.
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