Yahoo Finance LH vs. WST: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of LabCorp (LH) and West Pharmaceutical Services (WST). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, LabCorp has a Zacks Rank of #2 (Buy), while West Pharmaceutical Services has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LH likely has seen a stronger improvement to its earnings outlook than WST has recently. But this is just one factor that value investors are interested in.
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.
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.
LH currently has a forward P/E ratio of 10.85, while WST has a forward P/E of 50.64. We also note that LH has a PEG ratio of 1.03. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. WST currently has a PEG ratio of 1.83.
Another notable valuation metric for LH is its P/B ratio of 2.71. 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, WST has a P/B of 14.46.
These are just a few of the metrics contributing to LH's Value grade of A and WST's Value grade of C.
LH 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 LH is likely the superior value option right now.
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Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
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