COO vs. MMSI: Which Stock Is the Better Value Option?

Investors with an interest in Medical - Dental Supplies stocks have likely encountered both The Cooper Companies (COO) and Merit Medical (MMSI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

The Cooper Companies has a Zacks Rank of #2 (Buy), while Merit Medical has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that COO is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

COO currently has a forward P/E ratio of 16.44, while MMSI has a forward P/E of 21.20. We also note that COO has a PEG ratio of 1.99. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MMSI currently has a PEG ratio of 2.03.

Another notable valuation metric for COO is its P/B ratio of 1.8. 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, MMSI has a P/B of 3.21.

These are just a few of the metrics contributing to COO's Value grade of B and MMSI's Value grade of C.

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

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

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