HOLX vs. EW: Which Stock Is the Better Value Option?
Investors with an interest in Medical - Instruments stocks have likely encountered both Hologic (HOLX) and Edwards Lifesciences (EW). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Hologic and Edwards Lifesciences are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HOLX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
HOLX currently has a forward P/E ratio of 21, while EW has a forward P/E of 31.52. We also note that HOLX has a PEG ratio of 1.38. 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. EW currently has a PEG ratio of 4.62.
Another notable valuation metric for HOLX is its P/B ratio of 3.81. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, EW has a P/B of 8.46.
These metrics, and several others, help HOLX earn a Value grade of B, while EW has been given a Value grade of C.
HOLX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HOLX is likely the superior value option right now.
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Hologic, Inc. (HOLX) : Free Stock Analysis Report
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
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