Investors interested in stocks from the Medical Info Systems sector have probably already heard of AllScripts Healthcare (MDRX) and HMS Holdings (HMSY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Currently, AllScripts Healthcare has a Zacks Rank of #2 (Buy), while HMS Holdings has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MDRX has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
MDRX currently has a forward P/E ratio of 13.31, while HMSY has a forward P/E of 28.10. We also note that MDRX has a PEG ratio of 1.25. 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. HMSY currently has a PEG ratio of 2.55.
Another notable valuation metric for MDRX is its P/B ratio of 1.15. 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, HMSY has a P/B of 3.99.
Based on these metrics and many more, MDRX holds a Value grade of A, while HMSY has a Value grade of C.
MDRX 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 MDRX is likely the superior value option right now.
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Allscripts Healthcare Solutions, Inc. (MDRX) : Free Stock Analysis Report
HMS Holdings Corp (HMSY) : Free Stock Analysis Report
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