Press Release: Stryker Launches Next Generation Of Surgicount+ To Help Improve The Standard Of Care In Hospitals For Sponge Management And Blood Loss Assessment

Investors with an interest in Medical - Products stocks have likely encountered both Prestige Consumer Healthcare (PBH) and Stryker (SYK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Prestige Consumer Healthcare and Stryker are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

PBH currently has a forward P/E ratio of 18.13, while SYK has a forward P/E of 31.20. We also note that PBH has a PEG ratio of 2.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SYK currently has a PEG ratio of 2.84.

Another notable valuation metric for PBH is its P/B ratio of 2.30. 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, SYK has a P/B of 7.11.

These are just a few of the metrics contributing to PBH's Value grade of B and SYK's Value grade of C.

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

Zacks Investment Research

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.

Should You Consider BellRing Brands?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. BellRing Brands (BRBR) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.53 a share, just 10 days from its upcoming earnings release on November 18, 2024.

BellRing Brands' Earnings ESP sits at +8.14%, which, as explained above, is calculated by taking the percentage difference between the $0.53 Most Accurate Estimate and the Zacks Consensus Estimate of $0.49. BRBR is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

BRBR is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Stryker (SYK).

Slated to report earnings on February 4, 2025, Stryker holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.88 a share 88 days from its next quarterly update.

For Stryker, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.87 is +0.13%.

BRBR and SYK's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Zacks Investment Research