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

Zacks Equity Research

Investors interested in stocks from the Medical Info Systems sector have probably already heard of 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.

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, Computer Programs and Systems is sporting a Zacks Rank of #2 (Buy), while Cerner has a Zacks Rank of #5 (Strong Sell). 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 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 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.

CPSI currently has a forward P/E ratio of 13.06, while CERN has a forward P/E of 25.56. We also note that CPSI has a PEG ratio of 1.06. 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 2.34.

Another notable valuation metric for CPSI is its P/B ratio of 2.17. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CERN has a P/B of 5.51.

Based on these metrics and many more, CPSI holds a Value grade of A, while CERN has a Value grade of C.

CPSI has seen stronger estimate revision activity and sports more attractive valuation metrics than CERN, so it seems like value investors will conclude that CPSI is the superior option right now.


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Computer Programs and Systems, Inc. (CPSI) : Free Stock Analysis Report
 
Cerner Corporation (CERN) : Free Stock Analysis Report
 
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