Australia Markets closed

IART or GMED: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Medical - Instruments stocks are likely familiar with Integra LifeSciences (IART) and Globus Medical (GMED). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Integra LifeSciences and Globus Medical are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that IART's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

IART currently has a forward P/E ratio of 22.30, while GMED has a forward P/E of 28.05. We also note that IART has a PEG ratio of 1.91. 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. GMED currently has a PEG ratio of 2.46.

Another notable valuation metric for IART is its P/B ratio of 3.67. 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, GMED has a P/B of 3.70.

These metrics, and several others, help IART earn a Value grade of B, while GMED has been given a Value grade of C.

IART 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 IART is likely the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Integra LifeSciences Holdings Corporation (IART) : Free Stock Analysis Report
 
Globus Medical, Inc. (GMED) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.