Investors looking for stocks in the Medical Services sector might want to consider either EUROFINS SCIENT or HealthEquity (HQY - 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 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.
EUROFINS SCIENT and HealthEquity are both sporting a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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.
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.
ERFSF currently has a forward P/E ratio of 24.90, while HQY has a forward P/E of 47.32. We also note that ERFSF has a PEG ratio of 1.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HQY currently has a PEG ratio of 1.89.
Another notable valuation metric for ERFSF is its P/B ratio of 3.04. 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, HQY has a P/B of 4.65.
These are just a few of the metrics contributing to ERFSF's Value grade of B and HQY's Value grade of F.
Both ERFSF and HQY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ERFSF is the superior value option right now.