Investors interested in Medical - Products stocks are likely familiar with ResMed (RMD) and Insulet (PODD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, ResMed is sporting a Zacks Rank of #2 (Buy), while Insulet has a Zacks Rank of #3 (Hold). This means that RMD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

RMD currently has a forward P/E ratio of 26.33, while PODD has a forward P/E of 85.03. We also note that RMD has a PEG ratio of 1.78. 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. PODD currently has a PEG ratio of 4.18.

Another notable valuation metric for RMD is its P/B ratio of 6.95. 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, PODD has a P/B of 17.15.

Based on these metrics and many more, RMD holds a Value grade of B, while PODD has a Value grade of D.

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

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ResMed Inc. (RMD) : Free Stock Analysis Report

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