OPCH vs. CHE: Which Stock Should Value Investors Buy 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 companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Option Care and Chemed are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 24.73, while CHE has a forward P/E of 25.99. We also note that OPCH has a PEG ratio of 1.22. 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. CHE currently has a PEG ratio of 2.99.
Another notable valuation metric for OPCH is its P/B ratio of 4.27. 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, CHE has a P/B of 8.22.
Based on these metrics and many more, OPCH holds a Value grade of B, while CHE has a Value grade of C.
OPCH sticks out from CHE in both our Zacks Rank and Style Scores models, so value investors will likely feel that OPCH is the better option right now.
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Option Care Health, Inc. (OPCH) : Free Stock Analysis Report
Chemed Corporation (CHE) : Free Stock Analysis Report
