Investors interested in stocks from the Medical – Products sector have probably already heard of GE HealthCare Technologies (GEHC) and Insulet (PODD). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
GE HealthCare Technologies has a Zacks Rank of #2 (Buy), while Insulet has a Zacks Rank of #3 (Hold) right now. This means that GEHC’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
GEHC currently has a forward P/E ratio of 18.27, while PODD has a forward P/E of 81.89. We also note that GEHC has a PEG ratio of 2.81. 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. PODD currently has a PEG ratio of 4.03.
Another notable valuation metric for GEHC is its P/B ratio of 4.31. 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, PODD has a P/B of 16.52.
These metrics, and several others, help GEHC earn a Value grade of B, while PODD has been given a Value grade of D.
GEHC 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 GEHC is likely the superior value option right now.
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GE HealthCare Technologies Inc. (GEHC) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
