Investors interested in stocks from the Medical Info Systems sector have probably already heard of Cerner (CERN) and Tabula Rasa Healthcare (TRHC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Cerner has a Zacks Rank of #2 (Buy), while Tabula Rasa Healthcare has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CERN has an improving earnings outlook. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
CERN currently has a forward P/E ratio of 24.33, while TRHC has a forward P/E of 67.68. We also note that CERN has a PEG ratio of 1.82. 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. TRHC currently has a PEG ratio of 2.71.
Another notable valuation metric for CERN is its P/B ratio of 4.22. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TRHC has a P/B of 7.69.
These are just a few of the metrics contributing to CERN's Value grade of B and TRHC's Value grade of D.
CERN has seen stronger estimate revision activity and sports more attractive valuation metrics than TRHC, so it seems like value investors will conclude that CERN is the superior 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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