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CPSI vs. TRHC: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Medical Info Systems sector have probably already heard of Computer Programs and Systems and Tabula Rasa Healthcare . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Computer Programs and Systems and Tabula Rasa Healthcare are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CPSI is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

CPSI currently has a forward P/E ratio of 10.27, while TRHC has a forward P/E of 77.51. We also note that CPSI has a PEG ratio of 1.87. 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. TRHC currently has a PEG ratio of 3.10.

Another notable valuation metric for CPSI is its P/B ratio of 1.93. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TRHC has a P/B of 7.70.

These metrics, and several others, help CPSI earn a Value grade of B, while TRHC has been given a Value grade of D.

CPSI sticks out from TRHC in both our Zacks Rank and Style Scores models, so value investors will likely feel that CPSI is the better option right now.

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