Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Addus HomeCare (ADUS) and U.S. Physical Therapy (USPH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Addus HomeCare has a Zacks Rank of #2 (Buy), while U.S. Physical Therapy has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ADUS has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
ADUS currently has a forward P/E ratio of 17.79, while USPH has a forward P/E of 30.91. We also note that ADUS has a PEG ratio of 1.32. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. USPH currently has a PEG ratio of 3.78.
Another notable valuation metric for ADUS is its P/B ratio of 1.94. 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, USPH has a P/B of 2.45.
These are just a few of the metrics contributing to ADUS's Value grade of B and USPH's Value grade of C.
ADUS sticks out from USPH in both our Zacks Rank and Style Scores models, so value investors will likely feel that ADUS is the better option right now.
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Addus HomeCare Corporation (ADUS): Free Stock Analysis Report U.S. Physical Therapy, Inc. (USPH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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