Yahoo Finance BLCO vs. AVTR: Which Stock Is the Better Value Option?
Investors interested in stocks from the Medical Services sector have probably already heard of Bausch + Lomb (BLCO) and Avantor, Inc. (AVTR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Bausch + Lomb and Avantor, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BLCO has an improving earnings outlook. But this is only part of the picture for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BLCO currently has a forward P/E ratio of 25.46, while AVTR has a forward P/E of 25.59. We also note that BLCO has a PEG ratio of 1.59. 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. AVTR currently has a PEG ratio of 1.63.
Another notable valuation metric for BLCO is its P/B ratio of 0.83. 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, AVTR has a P/B of 3.33.
These metrics, and several others, help BLCO earn a Value grade of B, while AVTR has been given a Value grade of C.
BLCO has seen stronger estimate revision activity and sports more attractive valuation metrics than AVTR, so it seems like value investors will conclude that BLCO is the superior option right now.
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Bausch + Lomb Corporation (BLCO) : Free Stock Analysis Report
Avantor, Inc. (AVTR) : Free Stock Analysis Report
