Which stock offers the better value option?

Investors interested in medical and dental supplies stocks have likely come across both Dentsply International (XRAY) and Align Technology (ALGN). But which of these two stocks currently offers value investors the better value for money? We need to take a closer look.

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

Currently, both Dentsply International and Align Technology have a Zacks Rank of #2 (Buy). This means that both companies have had positive earnings estimate revisions, so investors can rest easy knowing that both stocks have an improved earnings outlook. But that’s just one factor that value investors care about.

Value investors also try to analyze a wide range of traditional numbers and metrics to determine whether a company is undervalued at its current share price level.

The Value category of the Style Scores system identifies undervalued companies using a number of key metrics, including the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other fundamentals that help us determine a company’s fair value.

XRAY currently has a forward P/E ratio of 23.59, while ALGN has a forward P/E ratio of 65.83. We also note that XRAY has a PEG ratio of 1.18. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. ALGN currently has a PEG ratio of 3.32.

Another important valuation metric for XRAY is its P/B ratio of 2.82. 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. For comparison, ALGN has a P/B of 14.66.

These are just some of the metrics that contribute to the B score for XRAY and the F score for ALGN.

Both XRAY and ALGN are impressive stocks with solid earnings prospects, but based on these valuation numbers, we believe XRAY is the better value option right now.

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DENTSPLY SIRONA Inc. (XRAY): Free Stock Analysis Report

Align Technology, Inc. (ALGN): Free Stock Analysis Report

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