Investors with an interest in Medical Info Systems stocks have likely encountered both AllScripts Healthcare (MDRX - Free Report) and Cerner (CERN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.
AllScripts Healthcare has a Zacks Rank of #2 (Buy), while Cerner has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MDRX has an improving earnings outlook. But this is only part of the picture for value investors.
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 16.08, while CERN has a forward P/E of 26.47. We also note that MDRX has a PEG ratio of 1.79. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CERN currently has a PEG ratio of 2.
Another notable valuation metric for MDRX is its P/B ratio of 1.43. 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, CERN has a P/B of 5.03.
These are just a few of the metrics contributing to MDRX's Value grade of A and CERN's Value grade of C.
MDRX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that MDRX is likely the superior value option right now.