Investors with an interest in Medical Services stocks have likely encountered both Icon PLC (ICLR) 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.
Icon PLC and GoodRx Holdings, Inc. are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that ICLR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
ICLR currently has a forward P/E ratio of 22.98, while GDRX has a forward P/E of 23.04. We also note that ICLR has a PEG ratio of 1.49. 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 1.83.
Another notable valuation metric for ICLR is its P/B ratio of 3.03. 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, GDRX has a P/B of 5.24.
These metrics, and several others, help ICLR earn a Value grade of B, while GDRX has been given a Value grade of D.
ICLR has seen stronger estimate revision activity and sports more attractive valuation metrics than GDRX, so it seems like value investors will conclude that ICLR is the superior option right now.
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GoodRx Holdings, Inc. (GDRX) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
