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AVAH vs. ELAN: Which Stock Is the Better Value Option?

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Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both Aveanna Healthcare Holdings Inc. (AVAH - Free Report) and Elanco Animal Health Incorporated (ELAN - 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 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.

Currently, Aveanna Healthcare Holdings Inc. has a Zacks Rank of #2 (Buy), while Elanco Animal Health Incorporated has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AVAH has an improving earnings outlook. 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.

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.

AVAH currently has a forward P/E ratio of 15.86, while ELAN has a forward P/E of 32.59. We also note that AVAH has a PEG ratio of 0.49. 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. ELAN currently has a PEG ratio of 0.65.

Another notable valuation metric for AVAH is its P/B ratio of 1.70. 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, ELAN has a P/B of 1.93.

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

AVAH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AVAH is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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Elanco Animal Health Incorporated (ELAN) - free report >>

Aveanna Healthcare Holdings Inc. (AVAH) - free report >>

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