ADUS vs. USPH: Which Stock Should Value Investors Buy Now?

ADUS USPH

Investors interested in stocks from the Medical - Outpatient and Home Healthcare sector have probably already heard of Addus HomeCare (ADUS - Free Report) and U.S. Physical Therapy (USPH - Free Report) . 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Addus HomeCare has a Zacks Rank of #2 (Buy), while U.S. Physical Therapy has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ADUS likely has seen a stronger improvement to its earnings outlook than USPH has recently. But this is just one factor that value investors are interested in.

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 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.

ADUS currently has a forward P/E ratio of 20.90, while USPH has a forward P/E of 38.70. We also note that ADUS has a PEG ratio of 1.80. 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. USPH currently has a PEG ratio of 5.09.

Another notable valuation metric for ADUS is its P/B ratio of 2.33. 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, USPH has a P/B of 3.37.

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

ADUS has seen stronger estimate revision activity and sports more attractive valuation metrics than USPH, so it seems like value investors will conclude that ADUS is the superior option right now.

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