Subscribe to Entrepreneur for $5
Subscribe

PDCO vs. CNMD: Which Stock Should Value Investors Buy Now?

PDCO vs. CNMD: Which Stock Is the Better Value Option?

By
This story originally appeared on Zacks

Investors with an interest in Medical - Dental Supplies stocks have likely encountered both Patterson Cos. (PDCO) and Conmed (CNMD). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

- Zacks

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Patterson Cos. has a Zacks Rank of #2 (Buy), while Conmed has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PDCO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 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.

PDCO currently has a forward P/E ratio of 14.74, while CNMD has a forward P/E of 40.93. We also note that PDCO has a PEG ratio of 1.53. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CNMD currently has a PEG ratio of 2.97.

Another notable valuation metric for PDCO is its P/B ratio of 2.89. 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, CNMD has a P/B of 5.08.

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

PDCO sticks out from CNMD in both our Zacks Rank and Style Scores models, so value investors will likely feel that PDCO is the better option right now.



Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How to Profit from Trillions on Spending for Infrastructure >>

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

 

Patterson Companies, Inc. (PDCO): Free Stock Analysis Report

 

CONMED Corporation (CNMD): Free Stock Analysis Report

 

To read this article on Zacks.com click here.