Investors with an interest in Medical - Dental Supplies stocks have likely encountered both Align Technology (ALGN) and Merit Medical (MMSI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Align Technology and Merit Medical are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ALGN likely has seen a stronger improvement to its earnings outlook than MMSI has recently. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

ALGN currently has a forward P/E ratio of 15.35, while MMSI has a forward P/E of 25.29. We also note that ALGN has a PEG ratio of 1.44. 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. MMSI currently has a PEG ratio of 2.41.

Another notable valuation metric for ALGN is its P/B ratio of 2.97. 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, MMSI has a P/B of 3.91.

Based on these metrics and many more, ALGN holds a Value grade of B, while MMSI has a Value grade of C.

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

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Align Technology, Inc. (ALGN) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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