Investors interested in stocks from the Medical Info Systems sector have probably already heard of AllScripts Healthcare (MDRX - Free Report) and Cerner (CERN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
AllScripts Healthcare has a Zacks Rank of #1 (Strong Buy), while Cerner has 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 MDRX is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
MDRX currently has a forward P/E ratio of 15.81, while CERN has a forward P/E of 27.01. We also note that MDRX has a PEG ratio of 1.54. 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. CERN currently has a PEG ratio of 1.88.
Another notable valuation metric for MDRX is its P/B ratio of 1.23. 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, CERN has a P/B of 4.58.
Based on these metrics and many more, MDRX holds a Value grade of A, while CERN has a Value grade of C.
MDRX sticks out from CERN in both our Zacks Rank and Style Scores models, so value investors will likely feel that MDRX is the better option right now.