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SYNH vs. NXGN: Which Stock Is the Better Value Option?

Investors interested in stocks from the Medical Info Systems sector have probably already heard of Syneos Health (SYNH) and Nextgen Healthcare (NXGN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Currently, Syneos Health has a Zacks Rank of #2 (Buy), while Nextgen Healthcare has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SYNH 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 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SYNH currently has a forward P/E ratio of 14.46, while NXGN has a forward P/E of 21.07. We also note that SYNH has a PEG ratio of 1.16. 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. NXGN currently has a PEG ratio of 2.37.

Another notable valuation metric for SYNH is its P/B ratio of 1.44. 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, NXGN has a P/B of 2.77.

These metrics, and several others, help SYNH earn a Value grade of B, while NXGN has been given a Value grade of C.

SYNH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SYNH is likely the superior value option right now.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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