Investors interested in stocks from the Medical Info Systems sector have probably already heard of Omnicell (OMCL) and Hims & Hers Health, Inc. (HIMS). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.
Right now, Omnicell is sporting a Zacks Rank of #2 (Buy), while Hims & Hers Health, Inc. has a Zacks Rank of #4 (Sell). This means that OMCL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
OMCL currently has a forward P/E ratio of 27.31, while HIMS has a forward P/E of 51.49. We also note that OMCL has a PEG ratio of 2.90. 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. HIMS currently has a PEG ratio of 4.92.
Another notable valuation metric for OMCL is its P/B ratio of 1.8. 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, HIMS has a P/B of 11.7.
These are just a few of the metrics contributing to OMCL's Value grade of B and HIMS's Value grade of C.
OMCL has seen stronger estimate revision activity and sports more attractive valuation metrics than HIMS, so it seems like value investors will conclude that OMCL is the superior option right now.
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Omnicell, Inc. (OMCL): Free Stock Analysis Report Hims & Hers Health, Inc. (HIMS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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