Investors looking for stocks in the Medical - Products sector might want to consider either Royal Philips (PHG) or ResMed (RMD) . 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight co ...

Financial Data and Key Metrics Changes - The company reported flat comparable sales in Q3 2024, following an 11% growth in Q3 2023, primarily due to deteriorating demand in China [6][4] - Adjusted EBITDA margin improved by 160 basis points to 11.8%, driven by stronger gross margins and productivity measures [31][8] - Free cash flow for the quarter was EUR 22 million, influenced by higher earnings but offset by working capital outflows [36][8] - The full-year sales outlook has been revised to a range of 0.5% to 1.5% growth, reflecting ongoing challenges in China [12][36] Business Line Data and Key Metrics Changes - Diagnosis & Treatment comparable sales decreased by 1%, with solid growth outside of China, while the adjusted EBITDA margin remained stable at 12.6% [28][30] - Connected Care sales were flat, with a 360 basis point increase in adjusted EBITDA margin to 7.3%, driven by improvements across all businesses [29][30] - Personal Health saw a 5% decline in comparable sales, primarily due to a double-digit drop in China, with the adjusted EBITDA margin decreasing to 16.5% [30][28] Market Data and Key Metrics Changes - Orders decreased by 2%, largely due to the decline in China, although year-to-date orders grew by 1% when including China [7][26] - The company continues to see solid sales growth outside of China, particularly in North America, which is expected to drive order growth for the full year [7][55] - The consumer market in China remains subdued, impacting sell-out trends and overall sales [10][12] Company Strategy and Development Direction - The company is focused on executing a three-year plan aimed at capturing growth and margin expansion opportunities, with patient safety as a top priority [5][4] - The strategy includes a commitment to local-for-local approaches in China, leveraging industry-leading innovations to respond to demand as it returns [12][14] - The company aims to enhance operational agility and productivity, having achieved over EUR 1.5 billion in savings to date [21][38] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing uncertainty in China, which is expected to continue impacting sales and orders [9][41] - The company remains confident in its ability to drive operational improvements and margin expansion despite external challenges [41][40] - Future growth is anticipated to be driven by strong performance in North America and other international markets, while caution is advised regarding the Chinese market [55][86] Other Important Information - The company has made significant progress in resolving issues related to product recalls and is committed to patient safety and quality [19][42] - Supply chain lead times have returned to normal, and service levels are improving, with a focus on supply reliability and flexibility [20][21] - The company has simplified its operating model, resulting in faster decision-making and improved productivity [21][41] Q&A Session Summary Question: What drove the softness in the hospital equipment business in China? - Management indicated that the softness was primarily due to market conditions rather than Philips-specific issues, with prolonged uncertainty affecting order flow [45][51] Question: Can you quantify the drivers of gross margin improvement? - Management highlighted that improvements came from innovation, operational enhancements, and financial discipline, indicating these drivers are expected to be durable [46][47] Question: What is the current outlook for orders in China? - Management noted a significant decline in both consumer and hospital demand in China, with low visibility on when orders will materialize [51][52] Question: How is order momentum trending outside of China? - Strong order growth has been observed in North America, with expectations for continued performance in that market [55][56] Question: What is the contribution of China to overall sales? - China accounts for approximately 10% of total sales, with a more significant impact on Personal Health and Diagnosis & Treatment segments [93][94]

Core Insights - Koninklijke Philips' American depositary receipts (ADRs) are down over 15% in premarket trading following a reduction in the 2024 sales outlook due to a "significant deterioration" in demand from China [1][2] - The company has revised its 2024 comparable sales growth forecast to a range of 0.5% to 1.5%, down from the previous estimate of 3% to 5% [1][2] Financial Performance - Philips reported third-quarter sales of 4.38 billion euros ($4.74 billion), a decrease from 4.47 billion euros in the same quarter last year, and below the consensus estimate of 4.55 billion euros [3] - The net income for the third quarter was 181 million euros, with earnings per share (EPS) of 0.19 euros, both of which fell short of estimates; however, adjusted EPS of 0.32 euros narrowly exceeded expectations [4] - Despite a 40% increase in ADRs this year until the previous Friday's close, the current premarket trading reflects a 16% decline [4] Market Commentary - CEO Roy Jakobs noted the continued impact from China, stating that demand from hospitals and consumers in China has further deteriorated, while growth remains solid in other regions [3]

On Monday, Koninklijke Philips NV PHG reported third-quarter adjusted EPS of 0.32 euros (or $0.35), missing the consensus of 0.35 euros. "In the quarter, demand from hospitals and consumers in China further deteriorated, while we continue to see solid growth in other regions. We have adjusted our full-year sales outlook to reflect the continued impact from China," said Roy Jakobs, CEO of Royal Philips. "Within a challenging macro environment, we remain focused on successfully executing our three-year plan t ...

Core Insights - The company reported third-quarter sales of EUR 4.4 billion, with flat comparable sales growth and a decrease in order intake by 2% primarily due to declining demand in China [1][4][8] - Adjusted EBITA margin improved by 160 basis points to 11.8%, driven by enhanced gross margins from innovations and productivity measures [1][4][9] - The full-year 2024 outlook has been revised, projecting comparable sales growth between 0.5% and 1.5%, with an adjusted EBITA margin around 11.5% and free cash flow expected at EUR 0.9 billion [1][8][9] Group and Segment Performance - Group comparable sales remained flat, contrasting with an 11% growth in Q3 2023, with solid growth in all regions except China [3][4] - Diagnosis & Treatment segment saw a 1% decrease in comparable sales, while Connected Care sales were flat, and Personal Health sales decreased by 5% due to significant declines in China [5][6] Profitability and Cash Flow - Operating income was reported at EUR 337 million, with operating cash flow of EUR 192 million and free cash flow of EUR 22 million [1][4] - Productivity initiatives yielded savings of EUR 188 million in Q3, contributing to a total of over EUR 1.5 billion in savings since 2023 [7] Market Outlook - The company anticipates continued challenges in the Chinese market, impacting overall demand and sales outlook [2][9] - Despite the difficulties in China, the company remains focused on executing its three-year plan to capture growth and improve margins [3][9] Innovation and Customer Engagement - The company has expanded its cardiovascular ultrasound platform and secured FDA approvals for new technologies aimed at enhancing patient care [11] - Partnerships with healthcare providers globally aim to improve access to care and clinical outcomes, particularly in emerging markets like Indonesia and China [11]

Core Viewpoint - Koninklijke Philips (PHG) is identified as a strong value stock with a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is potentially undervalued in the market [2]. Valuation Metrics - PHG has a Forward P/E ratio of 17.94, significantly lower than the industry average of 22.14, with a historical range between 12.29 and 18.69 over the past year [2]. - The PEG ratio for PHG stands at 0.93, compared to the industry average of 2.15, indicating a favorable valuation when considering expected earnings growth [2]. - PHG's P/B ratio is 2.34, which is attractive relative to the industry average of 5.32, with a historical range from 1.28 to 2.40 over the past year [3]. - The P/S ratio for PHG is 1.54, slightly below the industry average of 1.57, suggesting that the stock is reasonably priced based on revenue [3]. Investment Outlook - The combination of PHG's strong valuation metrics and positive earnings outlook positions it as an impressive value stock at the moment [3].

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Investors with an interest in Medical - Products stocks have likely encountered both Royal Philips (PHG) and ResMed (RMD) . 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. 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 ...

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Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated from A to F based on value, growth, and momentum characteristics, with A being the highest score [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5] Value Score - Focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - Evaluates stocks based on projected and historical earnings, sales, and cash flow to identify sustainable growth opportunities [4] Momentum Score - Assesses stocks based on price trends and earnings outlook, helping investors capitalize on upward or downward price movements [4] VGM Score - Combines the three Style Scores to provide a comprehensive rating, highlighting stocks with attractive value, growth potential, and positive momentum [5] Zacks Rank Integration - The Zacks Rank utilizes earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988 [6][7] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal investment potential [8] Earnings Estimate Revisions - The direction of earnings estimate revisions is crucial; stocks with lower Zacks Ranks but high Style Scores may still face downward price pressure [9] Company Spotlight: Koninklijke Philips N.V. (PHG) - Koninklijke Philips N.V. is rated 2 (Buy) on the Zacks Rank, with a VGM Score of A and a Momentum Style Score of B, indicating strong performance [10] - For fiscal 2024, the Zacks Consensus Estimate for PHG has increased by $0.03 to $1.59 per share, with an average earnings surprise of 53.7% [11]