Investors with an interest in Medical - Products stocks have likely encountered both VAREX IMAGING (VREX) and Boston Scientific (BSX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both VAREX IMAGING and Boston Scientific are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
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.
VREX currently has a forward P/E ratio of 19.80, while BSX has a forward P/E of 26.92. We also note that VREX has a PEG ratio of 0.66. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BSX currently has a PEG ratio of 2.35.
Another notable valuation metric for VREX is its P/B ratio of 1.76. 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, BSX has a P/B of 4.16.
These are just a few of the metrics contributing to VREX's Value grade of A and BSX's Value grade of C.
Both VREX and BSX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that VREX is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
