Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Astrana Health, Inc. (ASTH) and Chemed (CHE). 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.
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 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.
Astrana Health, Inc. has a Zacks Rank of #1 (Strong Buy), while Chemed has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASTH 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ASTH currently has a forward P/E ratio of 14.68, while CHE has a forward P/E of 20.43. We also note that ASTH has a PEG ratio of 0.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CHE currently has a PEG ratio of 2.09.
Another notable valuation metric for ASTH is its P/B ratio of 1.74. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CHE has a P/B of 5.83.
These metrics, and several others, help ASTH earn a Value grade of A, while CHE has been given a Value grade of C.
ASTH stands above CHE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASTH is the superior value option right now.
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Chemed Corporation (CHE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
