Investors interested in stocks from the Medical - Outpatient and Home Healthcare sector have probably already heard of Amedisys (AMED) and Chemed (CHE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Amedisys has a Zacks Rank of #2 (Buy), while Chemed has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that AMED likely has seen a stronger improvement to its earnings outlook than CHE has recently. But this is just one factor that value investors are interested in.
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.
AMED currently has a forward P/E ratio of 20.80, while CHE has a forward P/E of 25.53. We also note that AMED has a PEG ratio of 1.90. 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. CHE currently has a PEG ratio of 2.27.
Another notable valuation metric for AMED is its P/B ratio of 2.69. 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, CHE has a P/B of 7.50.
Based on these metrics and many more, AMED holds a Value grade of B, while CHE has a Value grade of C.
AMED sticks out from CHE in both our Zacks Rank and Style Scores models, so value investors will likely feel that AMED is the better option right now.
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Chemed Corporation (CHE) : Free Stock Analysis Report
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