EHC or AMED: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either Encompass Health (EHC) or Amedisys (AMED). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Encompass Health is sporting a Zacks Rank of #2 (Buy), while Amedisys has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EHC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
EHC currently has a forward P/E ratio of 19.63, while AMED has a forward P/E of 38.67. We also note that EHC has a PEG ratio of 1.14. 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. AMED currently has a PEG ratio of 3.21.
Another notable valuation metric for EHC is its P/B ratio of 3.96. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AMED has a P/B of 11.11.
Based on these metrics and many more, EHC holds a Value grade of A, while AMED has a Value grade of C.
EHC 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 EHC is likely the superior value option right now.
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Encompass Health Corporation (EHC) : Free Stock Analysis Report
Amedisys, Inc. (AMED) : Free Stock Analysis Report
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