Investors looking for stocks in the Medical Services sector might want to consider either Icon PLC (ICLR) or Doximity (DOCS). 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.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Icon PLC and Doximity are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ICLR has an improving earnings outlook. But this is only part of the picture 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.
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.
ICLR currently has a forward P/E ratio of 19.63, while DOCS has a forward P/E of 25.68. We also note that ICLR has a PEG ratio of 1.44. 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. DOCS currently has a PEG ratio of 2.92.
Another notable valuation metric for ICLR is its P/B ratio of 2.30. 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, DOCS has a P/B of 4.03.
These metrics, and several others, help ICLR earn a Value grade of B, while DOCS has been given a Value grade of D.
ICLR has seen stronger estimate revision activity and sports more attractive valuation metrics than DOCS, so it seems like value investors will conclude that ICLR is the superior option right now.
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