Investors interested in Medical Services stocks are likely familiar with AMN Healthcare Services (AMN - Free Report) and Icon PLC (ICLR - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
AMN Healthcare Services and Icon PLC are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that AMN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
AMN currently has a forward P/E ratio of 17.81, while ICLR has a forward P/E of 23.02. We also note that AMN has a PEG ratio of 1.37. 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. ICLR currently has a PEG ratio of 2.01.
Another notable valuation metric for AMN is its P/B ratio of 4.50. 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, ICLR has a P/B of 5.67.
Based on these metrics and many more, AMN holds a Value grade of B, while ICLR has a Value grade of C.
AMN stands above ICLR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMN is the superior value option right now.