Investors with an interest in Medical Services stocks have likely encountered both Cencora (COR) and Medpace (MEDP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Cencora and Medpace have a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
COR currently has a forward P/E ratio of 18.30, while MEDP has a forward P/E of 33.85. We also note that COR has a PEG ratio of 1.38. 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. MEDP currently has a PEG ratio of 2.98.
Another notable valuation metric for COR is its P/B ratio of 25.49. 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, MEDP has a P/B of 77.18.
Based on these metrics and many more, COR holds a Value grade of A, while MEDP has a Value grade of D.
Both COR and MEDP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that COR is the superior value option right now.
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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.
