ERFSF or HQY: Which Is the Better Value Stock Right Now?
Investors interested in Medical Services stocks are likely familiar with EUROFINS SCIENT (ERFSF) and HealthEquity (HQY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
EUROFINS SCIENT and HealthEquity are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that ERFSF likely has seen a stronger improvement to its earnings outlook than HQY has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
ERFSF currently has a forward P/E ratio of 25.76, while HQY has a forward P/E of 50.23. We also note that ERFSF has a PEG ratio of 1.58. 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. HQY currently has a PEG ratio of 2.01.
Another notable valuation metric for ERFSF is its P/B ratio of 3.14. 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, HQY has a P/B of 5.23.
These metrics, and several others, help ERFSF earn a Value grade of B, while HQY has been given a Value grade of D.
ERFSF sticks out from HQY in both our Zacks Rank and Style Scores models, so value investors will likely feel that ERFSF is the better option right now.
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