UHS vs. ACHC: Which Stock Should Value Investors Buy Now?

UHS ACHC

Investors with an interest in Medical - Hospital stocks have likely encountered both Universal Health Services (UHS - Free Report) and Acadia Healthcare (ACHC - 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.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Both Universal Health Services and Acadia Healthcare have a Zacks Rank of # 2 (Buy) right now. 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

UHS currently has a forward P/E ratio of 12.85, while ACHC has a forward P/E of 25.61. We also note that UHS has a PEG ratio of 1.97. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ACHC currently has a PEG ratio of 7.11.

Another notable valuation metric for UHS is its P/B ratio of 2.02. 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, ACHC has a P/B of 2.54.

These are just a few of the metrics contributing to UHS's Value grade of A and ACHC's Value grade of C.

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

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