Investors with an interest in Medical Info Systems stocks have likely encountered both HMS Holdings (HMSY - Free Report) and Tabula Rasa Healthcare (TRHC - 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
HMS Holdings 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 HMSY is likely seeing its earnings outlook improve to a greater extent. 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.
HMSY currently has a forward P/E ratio of 22.14, while TRHC has a forward P/E of 86.86. We also note that HMSY has a PEG ratio of 2.21. 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 2.41.
Another notable valuation metric for HMSY is its P/B ratio of 2.71. 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, TRHC has a P/B of 7.53.
These metrics, and several others, help HMSY earn a Value grade of B, while TRHC has been given a Value grade of D.
HMSY sticks out from TRHC in both our Zacks Rank and Style Scores models, so value investors will likely feel that HMSY is the better option right now.