Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Envision Healthcare and U.S. Physical Therapy (USPH - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Both Envision Healthcare and U.S. Physical Therapy 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 piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
EVHC currently has a forward P/E ratio of 12.67, while USPH has a forward P/E of 46.62. We also note that EVHC has a PEG ratio of 1.10. 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. USPH currently has a PEG ratio of 4.14.
Another notable valuation metric for EVHC is its P/B ratio of 1.05. 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, USPH has a P/B of 6.96.
These are just a few of the metrics contributing to EVHC's Value grade of A and USPH's Value grade of D.
Both EVHC and USPH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EVHC is the superior value option right now.