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CPSI vs. CERN: Which Stock Is the Better Value Option?

Zacks Equity Research
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Investors with an interest in Medical Info Systems stocks have likely encountered both Computer Programs and Systems (CPSI) and Cerner (CERN). 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.

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

Computer Programs and Systems and Cerner are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that CPSI likely has seen a stronger improvement to its earnings outlook than CERN has recently. But this is just one factor that value investors are interested in.

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.

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.

CPSI currently has a forward P/E ratio of 11.82, while CERN has a forward P/E of 20.93. We also note that CPSI has a PEG ratio of 1.14. 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. CERN currently has a PEG ratio of 1.52.

Another notable valuation metric for CPSI is its P/B ratio of 2.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CERN has a P/B of 3.76.

These are just a few of the metrics contributing to CPSI's Value grade of A and CERN's Value grade of C.

CPSI stands above CERN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CPSI is the superior value option right now.


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