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AMED or CHE: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical - Outpatient and Home Healthcare sector have probably already heard of Amedisys (AMED - 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.
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.
Amedisys has a Zacks Rank of #2 (Buy), while Chemed has a Zacks Rank of #3 (Hold) right now. This means that AMED's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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.
AMED currently has a forward P/E ratio of 20.53, while CHE has a forward P/E of 22.81. We also note that AMED has a PEG ratio of 1.87. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CHE currently has a PEG ratio of 2.07.
Another notable valuation metric for AMED is its P/B ratio of 2.65. 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, CHE has a P/B of 6.48.
These are just a few of the metrics contributing to AMED's Value grade of B and CHE's Value grade of C.
AMED stands above CHE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMED is the superior value option right now.