Investors looking for stocks in the Medical Info Systems sector might want to consider either Syneos Health (SYNH - Free Report) or Nextgen Healthcare (NXGN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Syneos Health has a Zacks Rank of #2 (Buy), while Nextgen Healthcare has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SYNH likely has seen a stronger improvement to its earnings outlook than NXGN has recently. 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.
SYNH currently has a forward P/E ratio of 16.73, while NXGN has a forward P/E of 18. We also note that SYNH has a PEG ratio of 1.59. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NXGN currently has a PEG ratio of 3.
Another notable valuation metric for SYNH is its P/B ratio of 1.95. 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, NXGN has a P/B of 2.63.
These metrics, and several others, help SYNH earn a Value grade of A, while NXGN has been given a Value grade of C.
SYNH has seen stronger estimate revision activity and sports more attractive valuation metrics than NXGN, so it seems like value investors will conclude that SYNH is the superior option right now.