Is Smith & Nephew SNATS (SNN) Stock Undervalued Right Now?

·3-min read

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Smith & Nephew SNATS (SNN) is a stock many investors are watching right now. SNN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 16.49 right now. For comparison, its industry sports an average P/E of 21.86. Over the past year, SNN's Forward P/E has been as high as 18.60 and as low as 12.80, with a median of 15.82.

Investors will also notice that SNN has a PEG ratio of 1.97. 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. SNN's PEG compares to its industry's average PEG of 2.62. Over the past 52 weeks, SNN's PEG has been as high as 3.26 and as low as 1.75, with a median of 2.17.

We should also highlight that SNN has a P/B ratio of 2.32. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.43. SNN's P/B has been as high as 2.64 and as low as 1.77, with a median of 2.23, over the past year.

Investors could also keep in mind VAREX IMAGING (VREX), an Medical - Products stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

VAREX IMAGING is trading at a forward earnings multiple of 22.02 at the moment, with a PEG ratio of 0.63. This compares to its industry's average P/E of 21.86 and average PEG ratio of 2.62.

Over the last 12 months, VREX's P/E has been as high as 34.52, as low as 16.08, with a median of 21.24, and its PEG ratio has been as high as 6.90, as low as 0.61, with a median of 3.71.

Additionally, VAREX IMAGING has a P/B ratio of 1.38 while its industry's price-to-book ratio sits at 4.43. For VREX, this valuation metric has been as high as 1.79, as low as 1.32, with a median of 1.59 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Smith & Nephew SNATS and VAREX IMAGING are likely undervalued currently. And when considering the strength of its earnings outlook, SNN and VREX sticks out as one of the market's strongest value stocks.

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