GEHC or LMAT: Which Is the Better Value Stock Right Now?

Investors interested in Medical - Products stocks are likely familiar with GE HealthCare Technologies (GEHC) and LeMaitre Vascular (LMAT). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, GE HealthCare Technologies has a Zacks Rank of #2 (Buy), while LeMaitre Vascular has a Zacks Rank of #4 (Sell). This means that GEHC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

GEHC currently has a forward P/E ratio of 14.65, while LMAT has a forward P/E of 28.47. We also note that GEHC has a PEG ratio of 2.09. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LMAT currently has a PEG ratio of 2.37.

Another notable valuation metric for GEHC is its P/B ratio of 2.97. 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, LMAT has a P/B of 4.46.

Based on these metrics and many more, GEHC holds a Value grade of B, while LMAT has a Value grade of D.

GEHC 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 GEHC is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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