Investors with an interest in Medical Info Systems stocks have likely encountered both Cerner (CERN) and Tabula Rasa Healthcare (TRHC). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Cerner and Tabula Rasa Healthcare are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that CERN'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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
CERN currently has a forward P/E ratio of 21.82, while TRHC has a forward P/E of 73.98. We also note that CERN has a PEG ratio of 1.71. 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. TRHC currently has a PEG ratio of 2.96.
Another notable valuation metric for CERN is its P/B ratio of 3.76. 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, TRHC has a P/B of 8.13.
Based on these metrics and many more, CERN holds a Value grade of B, while TRHC has a Value grade of D.
CERN sticks out from TRHC in both our Zacks Rank and Style Scores models, so value investors will likely feel that CERN is the better option right now.
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Cerner Corporation (CERN) : Free Stock Analysis Report
Tabula Rasa Healthcare Inc. (TRHC) : Free Stock Analysis Report
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