Investors with an interest in Medical Services stocks have likely encountered both EUROFINS SCIENT (ERFSF) and HealthEquity (HQY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, EUROFINS SCIENT is sporting a Zacks Rank of #1 (Strong Buy), while HealthEquity has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that ERFSF likely has seen a stronger improvement to its earnings outlook than HQY has recently. However, value investors will care about much more than just this.
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.
ERFSF currently has a forward P/E ratio of 23.46, while HQY has a forward P/E of 50.75. We also note that ERFSF has a PEG ratio of 1.44. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HQY currently has a PEG ratio of 2.03.
Another notable valuation metric for ERFSF is its P/B ratio of 2.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HQY has a P/B of 4.27.
These metrics, and several others, help ERFSF earn a Value grade of B, while HQY has been given a Value grade of C.
ERFSF 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 ERFSF is likely the superior value option right now.
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