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CPSI vs. OMCL: Which Stock Is the Better Value Option?
Investors with an interest in Medical Info Systems stocks have likely encountered both Computer Programs and Systems (CPSI - Free Report) and 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Computer Programs and Systems has a Zacks Rank of #1 (Strong Buy), while Omnicell has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CPSI has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CPSI currently has a forward P/E ratio of 13.11, while OMCL has a forward P/E of 39.06. We also note that CPSI has a PEG ratio of 0.94. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OMCL currently has a PEG ratio of 3.26.
Another notable valuation metric for CPSI is its P/B ratio of 2.35. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, OMCL has a P/B of 5.93.
These metrics, and several others, help CPSI earn a Value grade of B, while OMCL has been given a Value grade of C.
CPSI has seen stronger estimate revision activity and sports more attractive valuation metrics than OMCL, so it seems like value investors will conclude that CPSI is the superior option right now.