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CPSI vs. HMSY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Huntsman (HUN) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors interested in Medical Info Systems stocks are likely familiar with Computer Programs and Systems (CPSI) and HMS Holdings (HMSY). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Computer Programs and Systems and HMS Holdings are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CPSI currently has a forward P/E ratio of 12.06, while HMSY has a forward P/E of 26.14. We also note that CPSI has a PEG ratio of 1.17. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HMSY currently has a PEG ratio of 2.38.

Another notable valuation metric for CPSI is its P/B ratio of 2.47. 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, HMSY has a P/B of 3.67.

These metrics, and several others, help CPSI earn a Value grade of A, while HMSY has been given a Value grade of C.

Both CPSI and HMSY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CPSI is the superior value option right now.


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Computer Programs and Systems, Inc. (CPSI) : Free Stock Analysis Report
 
HMS Holdings Corp (HMSY) : Free Stock Analysis Report
 
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