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DVA or CHE: Which Is the Better Value Stock Right Now?

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Zacks Equity Research
·2 min read
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Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either DaVita HealthCare (DVA) or Chemed (CHE). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

DaVita HealthCare has a Zacks Rank of #2 (Buy), while Chemed has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DVA has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

DVA currently has a forward P/E ratio of 12.52, while CHE has a forward P/E of 29.04. We also note that DVA has a PEG ratio of 1.37. 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. CHE currently has a PEG ratio of 2.96.

Another notable valuation metric for DVA is its P/B ratio of 4.39. 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, CHE has a P/B of 11.08.

These are just a few of the metrics contributing to DVA's Value grade of A and CHE's Value grade of D.

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


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DaVita Inc. (DVA) : Free Stock Analysis Report
 
Chemed Corporation (CHE) : Free Stock Analysis Report
 
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Zacks Investment Research