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DVA vs. USPH: Which Stock Is the Better Value Option?

Zacks Equity Research
MGIC (MTG) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both DaVita HealthCare (DVA) and U.S. Physical Therapy (USPH). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

DaVita HealthCare and U.S. Physical Therapy are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that DVA likely has seen a stronger improvement to its earnings outlook than USPH has recently. But this is only part of the picture for value investors.

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.

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 17.27, while USPH has a forward P/E of 41.27. We also note that DVA has a PEG ratio of 1.03. 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. USPH currently has a PEG ratio of 3.67.

Another notable valuation metric for DVA is its P/B ratio of 2.59. 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, USPH has a P/B of 6.07.

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

DVA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DVA is likely the superior value option right now.


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DaVita Inc. (DVA) : Free Stock Analysis Report
 
U.S. Physical Therapy, Inc. (USPH) : Free Stock Analysis Report
 
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