Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Elanco Animal Health Incorporated (ELAN) and U.S. Physical Therapy (USPH). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Elanco Animal Health Incorporated has a Zacks Rank of #2 (Buy), while U.S. Physical Therapy has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ELAN likely has seen a stronger improvement to its earnings outlook than USPH has recently. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ELAN currently has a forward P/E ratio of 16.67, while USPH has a forward P/E of 31.62. We also note that ELAN has a PEG ratio of 2.73. 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. USPH currently has a PEG ratio of 3.81.
Another notable valuation metric for ELAN is its P/B ratio of 1.09. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, USPH has a P/B of 2.39.
Based on these metrics and many more, ELAN holds a Value grade of B, while USPH has a Value grade of C.
ELAN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ELAN is likely the superior value option right now.
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Elanco Animal Health Incorporated (ELAN): 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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