Investors interested in stocks from the Medical Services sector have probably already heard of ModivCare (MODV) and Progyny (PGNY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
ModivCare and Progyny are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that MODV's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
MODV currently has a forward P/E ratio of 16.21, while PGNY has a forward P/E of 232.50. We also note that MODV has a PEG ratio of 1.35. 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. PGNY currently has a PEG ratio of 11.04.
Another notable valuation metric for MODV is its P/B ratio of 4.08. 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, PGNY has a P/B of 12.37.
These metrics, and several others, help MODV earn a Value grade of B, while PGNY has been given a Value grade of D.
MODV 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 MODV is likely the superior value option right now.
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ModivCare Inc. (MODV) : Free Stock Analysis Report
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