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NXGN vs. OMCL: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Medical Info Systems sector might want to consider either Nextgen Healthcare or Omnicell (OMCL - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Style Scores highlight stocks with specific traits.

Right now, both Nextgen Healthcare and Omnicell are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

NXGN currently has a forward P/E ratio of 17.99, while OMCL has a forward P/E of 48.22. We also note that NXGN has a PEG ratio of 2.12. 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. OMCL currently has a PEG ratio of 3.01.

Another notable valuation metric for NXGN is its P/B ratio of 2.66. 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, OMCL has a P/B of 7.18.

These metrics, and several others, help NXGN earn a Value grade of B, while OMCL has been given a Value grade of D.

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


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