Investors looking for stocks in the Medical Services sector might want to consider either Concentra Group (CON) or Medpace (MEDP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Concentra Group and Medpace are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CON has 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.
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.
CON currently has a forward P/E ratio of 15.24, while MEDP has a forward P/E of 23.13. We also note that CON has a PEG ratio of 2.04. 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. MEDP currently has a PEG ratio of 3.14.
Another notable valuation metric for CON is its P/B ratio of 9.24. 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, MEDP has a P/B of 10.63.
Based on these metrics and many more, CON holds a Value grade of B, while MEDP has a Value grade of C.
CON has seen stronger estimate revision activity and sports more attractive valuation metrics than MEDP, so it seems like value investors will conclude that CON is the superior option right now.
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Concentra Group Holdings Parent, Inc. (CON): Free Stock Analysis Report Medpace Holdings, Inc. (MEDP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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