Investors with an interest in Medical Services stocks have likely encountered both Tivity Health (TVTY - Free Report) and PRA Health Sciences (PRAH - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Tivity Health and PRA Health Sciences are both sporting 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 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.
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.
TVTY currently has a forward P/E ratio of 12.90, while PRAH has a forward P/E of 24.89. We also note that TVTY has a PEG ratio of 1.17. 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. PRAH currently has a PEG ratio of 1.42.
Another notable valuation metric for TVTY is its P/B ratio of 3.24. 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, PRAH has a P/B of 6.95.
These are just a few of the metrics contributing to TVTY's Value grade of A and PRAH's Value grade of C.
Both TVTY and PRAH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TVTY is the superior value option right now.