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MDT or PODD: Which Is the Better Value Stock Right Now?
Investors interested in Medical - Products stocks are likely familiar with Medtronic (MDT - Free Report) and Insulet (PODD - Free Report) . 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.
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 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.
Medtronic has a Zacks Rank of #2 (Buy), while Insulet has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that MDT likely has seen a stronger improvement to its earnings outlook than PODD has recently. 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.
MDT currently has a forward P/E ratio of 16.59, while PODD has a forward P/E of 122.31. We also note that MDT has a PEG ratio of 2.70. 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 3.43.
Another notable valuation metric for MDT is its P/B ratio of 2.17. 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 24.88.
These are just a few of the metrics contributing to MDT's Value grade of B and PODD's Value grade of D.
MDT sticks out from PODD in both our Zacks Rank and Style Scores models, so value investors will likely feel that MDT is the better option right now.