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

Zacks Equity Research
·2 min read

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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

DaVita HealthCare has a Zacks Rank of #1 (Strong Buy), while Chemed has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that DVA likely has seen a stronger improvement to its earnings outlook than CHE has recently. 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.

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.

DVA currently has a forward P/E ratio of 12.99, while CHE has a forward P/E of 29.73. We also note that DVA has a PEG ratio of 1.09. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CHE currently has a PEG ratio of 3.09.

Another notable valuation metric for DVA is its P/B ratio of 4.69. 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, CHE has a P/B of 10.32.

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

DVA sticks out from CHE in both our Zacks Rank and Style Scores models, so value investors will likely feel that DVA is the better 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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