Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both American Renal Associates (ARA) and U.S. Physical Therapy (USPH). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Right now, both American Renal Associates and U.S. Physical Therapy are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
ARA currently has a forward P/E ratio of 20.91, while USPH has a forward P/E of 38.81. We also note that ARA has a PEG ratio of 3.28. 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 3.45.
Another notable valuation metric for ARA is its P/B ratio of 4.26. 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 6.37.
These are just a few of the metrics contributing to ARA's Value grade of A and USPH's Value grade of C.
Both ARA and USPH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ARA is the superior value option right now.
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American Renal Associates Holdings, Inc (ARA) : Free Stock Analysis Report
U.S. Physical Therapy, Inc. (USPH) : Free Stock Analysis Report
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