Investors with an interest in Medical – Dental Supplies stocks have likely encountered both LabCorp (LH) and The Cooper Companies (COO). But which of these two stocks presents investors with the better value opportunity right now? 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 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 The Cooper Companies has a Zacks Rank of #4 (Sell). This means that LH’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
LH currently has a forward P/E ratio of 10.39, while COO has a forward P/E of 27.72. We also note that LH has a PEG ratio of 0.98. 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. COO currently has a PEG ratio of 2.52.
Another notable valuation metric for LH is its P/B ratio of 2.60. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. By comparison, COO has a P/B of 2.94.
These are just a few of the metrics contributing to LH’s Value grade of A and COO’s Value grade of C.
LH has seen stronger estimate revision activity and sports more attractive valuation metrics than COO, so it seems like value investors will conclude that LH is the superior option right now.
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