HRC vs. BSX: Which Stock Should Value Investors Buy Now?

Investors interested in Medical - Products stocks are likely familiar with Hill-Rom (HRC) and Boston Scientific (BSX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Hill-Rom is sporting a Zacks Rank of #2 (Buy), while Boston Scientific 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 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.

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.

HRC currently has a forward P/E ratio of 19.58, while BSX has a forward P/E of 24.23. We also note that HRC has a PEG ratio of 1.77. 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. BSX currently has a PEG ratio of 2.30.

Another notable valuation metric for HRC is its P/B ratio of 4.49. 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, BSX has a P/B of 6.18.

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

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