HRC Vs. ABT: Which Stock Should Value Investors Buy Now?

By Zacks Investment ResearchStock MarketsMar 08, 2020 11:40PM ET

www.investing.com/analysis/hrc-vs-abt-which-stock-should-value-investors-buy-now-200514554

HRC Vs. ABT: Which Stock Should Value Investors Buy Now?

By Zacks Investment Research | Mar 08, 2020 11:40PM ET

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Investors interested in Medical - Products stocks are likely familiar with Hill-Rom (HRC) and Abbott (ABT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Hill-Rom has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HRC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

HRC currently has a forward P/E ratio of 17.30, while ABT has a forward P/E of 22.72. We also note that HRC has a PEG ratio of 1.56. 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. ABT currently has a PEG ratio of 2.15.

Another notable valuation metric for HRC is its P/B ratio of 3.97. 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, ABT has a P/B of 4.62.

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

HRC 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 HRC is likely the superior value option right now.

Hill-Rom Holdings, Inc. (HRC): Free Stock Analysis Report

Abbott Laboratories (NYSE:ABT): Free Stock Analysis Report

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HRC Vs. ABT: Which Stock Should Value Investors Buy Now?

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