LH vs. WST: Which Stock Should Value Investors Buy Now?
LH vs. WST: Which Stock Is the Better Value Option?
Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either LabCorp (LH) or West Pharmaceutical Services (WST). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, LabCorp has a Zacks Rank of #1 (Strong Buy), while West Pharmaceutical Services has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
LH currently has a forward P/E ratio of 11.03, while WST has a forward P/E of 54.16. We also note that LH has a PEG ratio of 1.04. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WST currently has a PEG ratio of 1.96.
Another notable valuation metric for LH is its P/B ratio of 2.77. 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, WST has a P/B of 15.47.
These metrics, and several others, help LH earn a Value grade of B, while WST has been given a Value grade of D.
LH has seen stronger estimate revision activity and sports more attractive valuation metrics than WST, so it seems like value investors will conclude that LH is the superior option right now.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>
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
Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research