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LH vs. ALGN: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either LabCorp (LH - Free Report) or Align Technology (ALGN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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.

Right now, LabCorp is sporting a Zacks Rank of #1 (Strong Buy), while Align Technology has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LH has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

LH currently has a forward P/E ratio of 18.18, while ALGN has a forward P/E of 94.94. We also note that LH has a PEG ratio of 2.43. 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. ALGN currently has a PEG ratio of 7.61.

Another notable valuation metric for LH is its P/B ratio of 2.75. 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, ALGN has a P/B of 8.28.

These are just a few of the metrics contributing to LH's Value grade of B and ALGN's Value grade of D.

LH 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 LH is likely the superior value option right now.


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