Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put VWR Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, VWR Corporation has a trailing twelve months PE ratio of 16.00, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.18. If we focus on the stock’s long-term PE trend, the current level puts VWR Corporation’s current PE ratio marginally below its midpoint (which is 16.05) over the past two years.
Further, the stock’s PE also compares favorably with the Zacks classified Medical sector’s trailing twelve months PE ratio, which stands at 18.66. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that VWR Corporation has a forward PE ratio (price relative to this year’s earnings) of 15.15, so it is fair to say that a slightly more value-oriented path may be ahead for VWR Corporation stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, VWR Corporation has a P/S ratio of about 0.80. This is significantly lower than the S&P 500 average, which comes in at 3.06 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, VWR Corporation currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes VWR a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for VWR Corporation is just 1.79, a level that is lower than the industry average of 2.06. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, VWR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though VWR Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘C’. This gives VWR a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past thirty days, compared to none higher, while the full year estimate has seen three upward and three downward revisions in the same time period.
This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has fallen by 6.8% in the past one month, while the full year estimate has inched up 1.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
VWR Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, despite a decent industry rank (top 41% out of more than 250 industries), a Zacks Rank #3, makes it hard to get too excited about this company overall. In fact, over the past one year, the Zacks Medical-Dental Supplies sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is VWR Corp. (VWR) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put VWR Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, VWR Corporation has a trailing twelve months PE ratio of 16.00, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.18. If we focus on the stock’s long-term PE trend, the current level puts VWR Corporation’s current PE ratio marginally below its midpoint (which is 16.05) over the past two years.
Further, the stock’s PE also compares favorably with the Zacks classified Medical sector’s trailing twelve months PE ratio, which stands at 18.66. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that VWR Corporation has a forward PE ratio (price relative to this year’s earnings) of 15.15, so it is fair to say that a slightly more value-oriented path may be ahead for VWR Corporation stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, VWR Corporation has a P/S ratio of about 0.80. This is significantly lower than the S&P 500 average, which comes in at 3.06 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, VWR Corporation currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes VWR a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for VWR Corporation is just 1.79, a level that is lower than the industry average of 2.06. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, VWR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though VWR Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘C’. This gives VWR a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past thirty days, compared to none higher, while the full year estimate has seen three upward and three downward revisions in the same time period.
This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has fallen by 6.8% in the past one month, while the full year estimate has inched up 1.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
VWR Corporation Price and Consensus
VWR Corporation Price and Consensus | VWR Corporation Quote
This mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
VWR Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, despite a decent industry rank (top 41% out of more than 250 industries), a Zacks Rank #3, makes it hard to get too excited about this company overall. In fact, over the past one year, the Zacks Medical-Dental Supplies sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>