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ABT or RMD: Which Is the Better Value Stock Right Now?

ABT vs. RMD: Which Stock Is the Better Value Option?

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This story originally appeared on Zacks

Investors with an interest in Medical - Products stocks have likely encountered both Abbott (ABT) and ResMed (RMD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

- Zacks

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Abbott and ResMed are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ABT is likely seeing its earnings outlook improve to a greater extent. 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.

ABT currently has a forward P/E ratio of 26.71, while RMD has a forward P/E of 39.62. We also note that ABT has a PEG ratio of 2.23. 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. RMD currently has a PEG ratio of 2.50.

Another notable valuation metric for ABT is its P/B ratio of 6.89. 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, RMD has a P/B of 11.94.

Based on these metrics and many more, ABT holds a Value grade of B, while RMD has a Value grade of C.

ABT stands above RMD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ABT is the superior value option right now.





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Abbott Laboratories (ABT): Free Stock Analysis Report

 

ResMed Inc. (RMD): Free Stock Analysis Report

 

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