PINC vs. HQY: Which Stock Is the Better Value Option?
Investors interested in stocks from the Medical Services sector have probably already heard of Premier, Inc. (PINC) and HealthEquity (HQY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, both Premier, Inc. and HealthEquity are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PINC currently has a forward P/E ratio of 12.83, while HQY has a forward P/E of 56.59. We also note that PINC has a PEG ratio of 1.27. 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. HQY currently has a PEG ratio of 2.11.
Another notable valuation metric for PINC is its P/B ratio of 1.79. 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, HQY has a P/B of 3.28.
These are just a few of the metrics contributing to PINC's Value grade of A and HQY's Value grade of D.
Both PINC and HQY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PINC is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Premier, Inc. (PINC) : Free Stock Analysis Report
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
