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LHCG or CHE: Which Is the Better Value Stock Right Now?

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Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with LHC Group and Chemed (CHE - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both LHC Group and Chemed 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. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

LHCG currently has a forward P/E ratio of 21.35, while CHE has a forward P/E of 29.61. We also note that LHCG has a PEG ratio of 1.18. 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. CHE currently has a PEG ratio of 2.96.

Another notable valuation metric for LHCG 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, CHE has a P/B of 10.31.

These metrics, and several others, help LHCG earn a Value grade of A, while CHE has been given a Value grade of C.

Both LHCG and CHE are impressive stocks with improving earnings outlooks. But considering the above metrics, value investors will likely feel that LHCG is the better option right now.


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