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DGX vs. CHE: Which Stock Is the Better Value Option?

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Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Quest Diagnostics (DGX - Free Report) and Chemed (CHE - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Quest Diagnostics is sporting a Zacks Rank of #2 (Buy), while Chemed has a Zacks Rank of #3 (Hold). This means that DGX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.

DGX currently has a forward P/E ratio of 14.54, while CHE has a forward P/E of 25.54. We also note that DGX has a PEG ratio of 2.17. 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. CHE currently has a PEG ratio of 2.89.

Another notable valuation metric for DGX is its P/B ratio of 2.37. 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 8.83.

Based on these metrics and many more, DGX holds a Value grade of B, while CHE has a Value grade of D.

DGX sticks out from CHE in both our Zacks Rank and Style Scores models, so value investors will likely feel that DGX is the better option right now.


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Quest Diagnostics Incorporated (DGX) - free report >>

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