Investors interested in Medical Services stocks are likely familiar with Pediatrix Medical Group (MD) and HealthEquity (HQY). 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 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, Pediatrix Medical Group is sporting a Zacks Rank of #1 (Strong Buy), while HealthEquity has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MD likely has seen a stronger improvement to its earnings outlook than HQY 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 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.
MD currently has a forward P/E ratio of 9.39, while HQY has a forward P/E of 23.85. We also note that MD has a PEG ratio of 0.99. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HQY currently has a PEG ratio of 1.17.
Another notable valuation metric for MD is its P/B ratio of 1.63. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HQY has a P/B of 3.57.
Based on these metrics and many more, MD holds a Value grade of A, while HQY has a Value grade of D.
MD sticks out from HQY in both our Zacks Rank and Style Scores models, so value investors will likely feel that MD is the better option right now.
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Pediatrix Medical Group, Inc. (MD): Free Stock Analysis Report HealthEquity, Inc. (HQY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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