Investors looking for stocks in the Medical Services sector might want to consider either Bausch + Lomb (BLCO) or HealthEquity (HQY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Bausch + Lomb has a Zacks Rank of #2 (Buy), while HealthEquity has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BLCO likely has seen a stronger improvement to its earnings outlook than HQY has recently. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BLCO currently has a forward P/E ratio of 21.49, while HQY has a forward P/E of 21.91. We also note that BLCO has a PEG ratio of 1.00. 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. HQY currently has a PEG ratio of 1.04.
Another notable valuation metric for BLCO is its P/B ratio of 0.94. 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 3.46.
Based on these metrics and many more, BLCO holds a Value grade of B, while HQY has a Value grade of C.
BLCO stands above HQY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BLCO is the superior value option right now.
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Bausch + Lomb Corporation (BLCO): Free Stock Analysis Report HealthEquity, Inc. (HQY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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