U.S. markets open in 5 hours 32 minutes
  • S&P Futures

    4,572.00
    +6.75 (+0.15%)
     
  • Dow Futures

    35,694.00
    +50.00 (+0.14%)
     
  • Nasdaq Futures

    15,571.75
    +26.75 (+0.17%)
     
  • Russell 2000 Futures

    2,289.60
    -4.30 (-0.19%)
     
  • Crude Oil

    83.38
    -1.27 (-1.50%)
     
  • Gold

    1,788.10
    -5.30 (-0.30%)
     
  • Silver

    24.06
    -0.03 (-0.14%)
     
  • EUR/USD

    1.1609
    +0.0007 (+0.06%)
     
  • 10-Yr Bond

    1.6190
    0.0000 (0.00%)
     
  • Vix

    15.85
    +0.61 (+4.00%)
     
  • GBP/USD

    1.3747
    -0.0016 (-0.12%)
     
  • USD/JPY

    113.7210
    -0.4080 (-0.36%)
     
  • BTC-USD

    60,056.97
    -2,427.70 (-3.89%)
     
  • CMC Crypto 200

    1,454.24
    -50.91 (-3.38%)
     
  • FTSE 100

    7,267.96
    -9.66 (-0.13%)
     
  • Nikkei 225

    29,098.24
    -7.77 (-0.03%)
     

EHC or AMED: Which Is the Better Value Stock Right Now?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Encompass Health (EHC) and Amedisys (AMED). 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 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 #5 (Strong Sell). 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 just one factor that value investors are interested in.

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.

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.

EHC currently has a forward P/E ratio of 17.84, while AMED has a forward P/E of 29.65. We also note that EHC has a PEG ratio of 0.99. 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 2.69.

Another notable valuation metric for EHC is its P/B ratio of 3.61. 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 6.72.

These metrics, and several others, help EHC earn a Value grade of A, while AMED has been given a Value grade of C.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Encompass Health Corporation (EHC) : Free Stock Analysis Report
 
Amedisys, Inc. (AMED) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.