Which Stock is the Best Value Option?
Investors interested in Medical-Dental Supplies stocks are likely to have come across both Merit Medical and Align Technology. Which stock offers value investors more bang for their buck? We will need to look closer.
There are many strategies to find value stocks. However, we believe that combining a strong Zacks Rank and a high grade in our Value category of Style Scores system will yield the highest returns. Our Style Scores identify stocks that have specific characteristics and companies with positive estimates revision trends. The Zacks Rank is a proven indicator of a company’s strength.
Merit Medical currently has a Zacks rank of #2 (Buy), and Align Technology has an Zacks rank of #5 (Strong sell). Investors should be confident that MMSI’s earnings outlook is improving, as the Zacks Rank favors stocks with recent positive revisions to earnings estimates. But value investors care more than this.
Value investors will also look at many tried-and-true figures in order to find stocks they believe to be undervalued at current share prices.
Our Value category highlights companies that are undervalued. It looks at a number of key metrics such as the P/E ratio as well as earnings yield, cash flows per share and other fundamentals that value investors have used for years.
MMSI has a forward PE ratio of 24.94 while ALGN has an forward PE ratio of 27.39. MMSI also has a PEG of 2.27. This popular metric is similar in concept to the P/E ratio. The difference is that the PEG rate also includes the company’s expected earnings increase rate. ALGN currently has an PEG ratio 22.27.
MMSI’s P/B ratio of 3.68 is another notable valuation metric. The P/B method is used to compare a stock’s market value to its total assets and liabilities. ALGN’s P/B is 4.65.
These metrics, along with many others, help MMSI earn the Value grade B. ALGN was awarded the Value grade D.
MMSI has experienced stronger estimate revision activity, and ALGN sports more attractive valuation metrics. It seems that value investors will conclude MMSI to be a superior choice right now.
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report