NHNKY Vs. PEN: Which Stock Is The Better Value Option?

Investors with an interest in Medical - Instruments stocks have likely encountered both Nihon Kohden Corporation (NHNKY) and Penumbra (PEN). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Nihon Kohden Corporation and Penumbra are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

NHNKY currently has a forward P/E ratio of 26.13, while PEN has a forward P/E of 180.30. We also note that NHNKY has a PEG ratio of 2.81. 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. PEN currently has a PEG ratio of 9.02.

Another notable valuation metric for NHNKY is its P/B ratio of 2.61. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PEN has a P/B of 11.55.

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

Both NHNKY and PEN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NHNKY is the superior value option right now.