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DVA vs. AMED: Which Stock Should Value Investors Buy Now?

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Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with DaVita HealthCare (DVA) and Amedisys (AMED). But which of these two stocks presents investors with the better value opportunity right now? 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.

Right now, both DaVita HealthCare and Amedisys are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

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.

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.

DVA currently has a forward P/E ratio of 13.73, while AMED has a forward P/E of 36.32. We also note that DVA has a PEG ratio of 0.95. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMED currently has a PEG ratio of 3.02.

Another notable valuation metric for DVA is its P/B ratio of 9.05. 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, AMED has a P/B of 10.34.

Based on these metrics and many more, DVA holds a Value grade of A, while AMED has a Value grade of D.

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


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DaVita Inc. (DVA) : Free Stock Analysis Report
 
Amedisys, Inc. (AMED) : Free Stock Analysis Report
 
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