Investors with an interest in Medical Services stocks have likely encountered both Express Scripts (ESRX) and HealthEquity (HQY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Express Scripts and HealthEquity are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
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.
ESRX currently has a forward P/E ratio of 10.71, while HQY has a forward P/E of 85.42. We also note that ESRX has a PEG ratio of 1.22. 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 2.57.
Another notable valuation metric for ESRX is its P/B ratio of 2.67. 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, HQY has a P/B of 13.59.
These are just a few of the metrics contributing to ESRX's Value grade of A and HQY's Value grade of D.
Both ESRX and HQY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ESRX is the superior value option right now.
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Express Scripts Holding Company (ESRX) : Free Stock Analysis Report
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