Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of Align Technology (ALGN) and Straumann Holding AG (SAUHY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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 Align Technology and Straumann Holding AG 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. But this is only part of the picture for value investors.
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 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 15.80, while SAUHY has a forward P/E of 32.31. We also note that ALGN has a PEG ratio of 1.54. 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. SAUHY currently has a PEG ratio of 2.41.
Another notable valuation metric for ALGN is its P/B ratio of 3.1. 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, SAUHY has a P/B of 7.95.
These metrics, and several others, help ALGN earn a Value grade of B, while SAUHY has been given a Value grade of D.
Both ALGN and SAUHY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ALGN is the superior value option right now.
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Align Technology, Inc. (ALGN) : Free Stock Analysis Report
Straumann Holding AG (SAUHY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
