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TFX or PEN: Which Is the Better Value Stock Right Now?

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Investors interested in Medical - Instruments stocks are likely familiar with Teleflex (TFX - Free Report) and Penumbra (PEN - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Teleflex has a Zacks Rank of #2 (Buy), while Penumbra 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 TFX has an improving earnings outlook. But this is only part of the picture for value investors.

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.

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.

TFX currently has a forward P/E ratio of 17.53, while PEN has a forward P/E of 77.63. We also note that TFX has a PEG ratio of 2.22. 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. PEN currently has a PEG ratio of 2.29.

Another notable valuation metric for TFX is its P/B ratio of 2.53. 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, PEN has a P/B of 6.86.

These metrics, and several others, help TFX earn a Value grade of B, while PEN has been given a Value grade of D.

TFX has seen stronger estimate revision activity and sports more attractive valuation metrics than PEN, so it seems like value investors will conclude that TFX is the superior option right now.


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