Investors looking for stocks in the Medical Info Systems sector might want to consider either Nextgen Healthcare (NXGN) or Tabula Rasa Healthcare (TRHC). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Nextgen Healthcare has a Zacks Rank of #2 (Buy), while Tabula Rasa Healthcare has a Zacks Rank of #4 (Sell) right now. This means that NXGN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
NXGN currently has a forward P/E ratio of 22.70, while TRHC has a forward P/E of 118.52. We also note that NXGN has a PEG ratio of 2.56. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TRHC currently has a PEG ratio of 4.74.
Another notable valuation metric for NXGN is its P/B ratio of 3.44. 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, TRHC has a P/B of 5.58.
These are just a few of the metrics contributing to NXGN's Value grade of B and TRHC's Value grade of F.
NXGN stands above TRHC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NXGN is the superior value option right now.
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NEXTGEN HEALTHCARE, INC (NXGN) : Free Stock Analysis Report
Tabula Rasa Healthcare Inc. (TRHC) : Free Stock Analysis Report
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