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DVA vs. CHE: Which Stock Is the Better Value Option?

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Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with DaVita HealthCare (DVA - Free Report) and Chemed (CHE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

DaVita HealthCare and Chemed are both sporting a Zacks Rank of # 2 (Buy) right now. 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 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.

DVA currently has a forward P/E ratio of 14.83, while CHE has a forward P/E of 26.79. We also note that DVA has a PEG ratio of 0.81. 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 2.65.

Another notable valuation metric for DVA is its P/B ratio of 7.11. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CHE has a P/B of 9.64.

These are just a few of the metrics contributing to DVA's Value grade of A and CHE's Value grade of D.

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


In-Depth Zacks Research for the Tickers Above


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DaVita Inc. (DVA) - free report >>

Chemed Corporation (CHE) - free report >>

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