Investors looking for stocks in the Medical - Products sector might want to consider either Hill-Rom (HRC) or SurModics (SRDX). 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.

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

Hill-Rom has a Zacks Rank of #2 (Buy), while SurModics has a Zacks Rank of #3 (Hold) right now. This means that HRC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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 18.98, while SRDX has a forward P/E of 172.45. We also note that HRC has a PEG ratio of 2.40. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SRDX currently has a PEG ratio of 17.25.

Another notable valuation metric for HRC is its P/B ratio of 4.15. 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, SRDX has a P/B of 5.22.

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

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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HillRom Holdings, Inc. (HRC) : Free Stock Analysis Report
 
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