GEHC vs. ABT: Which Stock Is the Better Value Option?

Investors with an interest in Medical - Products stocks have likely encountered both GE HealthCare Technologies (GEHC) and Abbott (ABT). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

GE HealthCare Technologies and Abbott are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GEHC likely has seen a stronger improvement to its earnings outlook than ABT has recently. But this is only part of the picture 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.

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.

GEHC currently has a forward P/E ratio of 14.14, while ABT has a forward P/E of 19.03. We also note that GEHC 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 1.72.

Another notable valuation metric for GEHC is its P/B ratio of 3.1. 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, ABT has a P/B of 3.56.

These metrics, and several others, help GEHC earn a Value grade of B, while ABT has been given a Value grade of C.

GEHC has seen stronger estimate revision activity and sports more attractive valuation metrics than ABT, so it seems like value investors will conclude that GEHC is the superior option right now.

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GE HealthCare Technologies Inc. (GEHC): Free Stock Analysis Report

Abbott Laboratories (ABT): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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