OPCH or CHE: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical - Outpatient and Home Healthcare sector have probably already heard of Option Care (OPCH) and Chemed (CHE). 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.
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.
Option Care has a Zacks Rank of #1 (Strong Buy), while Chemed has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OPCH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
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.
OPCH currently has a forward P/E ratio of 22.85, while CHE has a forward P/E of 26. We also note that OPCH has a PEG ratio of 1.13. 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. CHE currently has a PEG ratio of 3.
Another notable valuation metric for OPCH is its P/B ratio of 3.94. 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, CHE has a P/B of 8.22.
These are just a few of the metrics contributing to OPCH's Value grade of B and CHE's Value grade of D.
OPCH has seen stronger estimate revision activity and sports more attractive valuation metrics than CHE, so it seems like value investors will conclude that OPCH is the superior option right now.
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Option Care Health, Inc. (OPCH) : Free Stock Analysis Report
Chemed Corporation (CHE) : Free Stock Analysis Report
