U.S. Markets closed

AMN or HQY: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Medical Services sector might want to consider either AMN Healthcare Services (AMN) 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

AMN Healthcare Services and HealthEquity are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that AMN 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

AMN currently has a forward P/E ratio of 17.32, while HQY has a forward P/E of 59.44. We also note that AMN has a PEG ratio of 1.39. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HQY currently has a PEG ratio of 2.95.

Another notable valuation metric for AMN is its P/B ratio of 3.73. 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, HQY has a P/B of 9.35.

These metrics, and several others, help AMN earn a Value grade of B, while HQY has been given a Value grade of F.

AMN 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 AMN is likely the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
 
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research