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EHC or AMED: Which Is the Better Value Stock Right Now?

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Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both Encompass Health (EHC - Free Report) and Amedisys (AMED - 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.

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.

Encompass Health and Amedisys are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EHC has 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.

EHC currently has a forward P/E ratio of 19.20, while AMED has a forward P/E of 37.90. We also note that EHC has a PEG ratio of 1.11. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AMED currently has a PEG ratio of 3.15.

Another notable valuation metric for EHC is its P/B ratio of 3.88. 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, AMED has a P/B of 10.89.

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

EHC sticks out from AMED in both our Zacks Rank and Style Scores models, so value investors will likely feel that EHC is the better option right now.


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Amedisys, Inc. (AMED) - free report >>

Encompass Health Corporation (EHC) - free report >>

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