ELV or DHR: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical Services sector have probably already heard of Elevance Health (ELV) and Danaher (DHR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Currently, Elevance Health has a Zacks Rank of #2 (Buy), while Danaher has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ELV has an improving earnings outlook. 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.
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.
ELV currently has a forward P/E ratio of 14.20, while DHR has a forward P/E of 25.11. We also note that ELV has a PEG ratio of 2.01. 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. DHR currently has a PEG ratio of 2.67.
Another notable valuation metric for ELV is its P/B ratio of 1.86. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, DHR has a P/B of 2.86.
Based on these metrics and many more, ELV holds a Value grade of A, while DHR has a Value grade of D.
ELV sticks out from DHR in both our Zacks Rank and Style Scores models, so value investors will likely feel that ELV is the better option right now.
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Danaher Corporation (DHR) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
