HOLX or SMLR: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Medical - Instruments sector might want to consider either Hologic (HOLX) or Semler Scientific Inc. (SMLR). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, both Hologic and Semler Scientific Inc. are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HOLX currently has a forward P/E ratio of 8.18, while SMLR has a forward P/E of 43.80. We also note that HOLX has a PEG ratio of 0.53. 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. SMLR currently has a PEG ratio of 1.75.

Another notable valuation metric for HOLX is its P/B ratio of 5.68. 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, SMLR has a P/B of 30.17.

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

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


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