Investors looking for stocks in the Medical Info Systems sector might want to consider either Nextgen Healthcare (NXGN - Free Report) or Omnicell (OMCL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Nextgen Healthcare and Omnicell are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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.
NXGN currently has a forward P/E ratio of 22.56, while OMCL has a forward P/E of 30.93. We also note that NXGN has a PEG ratio of 2.54. 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. OMCL currently has a PEG ratio of 2.63.
Another notable valuation metric for NXGN is its P/B ratio of 3.42. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OMCL has a P/B of 4.55.
These metrics, and several others, help NXGN earn a Value grade of B, while OMCL has been given a Value grade of D.
Both NXGN and OMCL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NXGN is the superior value option right now.