Investors with an interest in Medical Services stocks have likely encountered both Elevance Health (ELV) and GoodRx Holdings, Inc. (GDRX). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Elevance Health is sporting a Zacks Rank of #2 (Buy), while GoodRx Holdings, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ELV likely has seen a stronger improvement to its earnings outlook than GDRX has recently. But this is just one factor that value investors are interested in.
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.
ELV currently has a forward P/E ratio of 16.79, while GDRX has a forward P/E of 28.68. We also note that ELV has a PEG ratio of 1.39. 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. GDRX currently has a PEG ratio of 1.75.
Another notable valuation metric for ELV is its P/B ratio of 3.22. 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, GDRX has a P/B of 3.59.
These metrics, and several others, help ELV earn a Value grade of A, while GDRX has been given a Value grade of C.
ELV has seen stronger estimate revision activity and sports more attractive valuation metrics than GDRX, so it seems like value investors will conclude that ELV is the superior option right now.
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