Back to top

Image: Bigstock

EYE vs. AHCO: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Medical - Products stocks have likely encountered both National Vision (EYE - Free Report) and DFB Healthcare Acquisitions Corp. (AHCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, National Vision has a Zacks Rank of #2 (Buy), while DFB Healthcare Acquisitions Corp. has a Zacks Rank of #3 (Hold). This means that EYE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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 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.

EYE currently has a forward P/E ratio of 46.31, while AHCO has a forward P/E of 100.80. We also note that EYE has a PEG ratio of 2.60. 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. AHCO currently has a PEG ratio of 4.03.

Another notable valuation metric for EYE is its P/B ratio of 3.34. 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, AHCO has a P/B of 63.

Based on these metrics and many more, EYE holds a Value grade of B, while AHCO has a Value grade of C.

EYE has seen stronger estimate revision activity and sports more attractive valuation metrics than AHCO, so it seems like value investors will conclude that EYE is the superior option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


National Vision Holdings, Inc. (EYE) - free report >>

Published in