Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with LHC Group (LHCG) and Addus HomeCare (ADUS). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both LHC Group and Addus HomeCare are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
LHCG currently has a forward P/E ratio of 27.01, while ADUS has a forward P/E of 31.79. We also note that LHCG has a PEG ratio of 1.98. 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. ADUS currently has a PEG ratio of 2.05.
Another notable valuation metric for LHCG is its P/B ratio of 2.59. 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, ADUS has a P/B of 3.47.
These metrics, and several others, help LHCG earn a Value grade of B, while ADUS has been given a Value grade of C.
Both LHCG and ADUS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LHCG is the superior value option right now.
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LHC Group (LHCG) : Free Stock Analysis Report
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