Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either LHC Group (LHCG - Free Report) or Chemed (CHE - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Both LHC Group and Chemed have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
LHCG currently has a forward P/E ratio of 23.50, while CHE has a forward P/E of 28.93. We also note that LHCG has a PEG ratio of 1.30. 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. CHE currently has a PEG ratio of 2.89.
Another notable valuation metric for LHCG is its P/B ratio of 2.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CHE has a P/B of 10.08.
These are just a few of the metrics contributing to LHCG's Value grade of A and CHE's Value grade of C.
Both LHCG and CHE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LHCG is the superior value option right now.