Investors interested in stocks from the Medical - Products sector have probably already heard of Envista (NVST) and Lonza Group Ag (LZAGY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Envista has a Zacks Rank of #2 (Buy), while Lonza Group Ag has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that NVST likely has seen a stronger improvement to its earnings outlook than LZAGY has recently. However, value investors will care about much more than just this.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NVST currently has a forward P/E ratio of 26.84, while LZAGY has a forward P/E of 37.15. We also note that NVST has a PEG ratio of 2.68. 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. LZAGY currently has a PEG ratio of 2.99.
Another notable valuation metric for NVST is its P/B ratio of 1.08. 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, LZAGY has a P/B of 4.13.
These are just a few of the metrics contributing to NVST's Value grade of B and LZAGY's Value grade of F.
NVST sticks out from LZAGY in both our Zacks Rank and Style Scores models, so value investors will likely feel that NVST is the better option right now.
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