Investors with an interest in Medical Info Systems stocks have likely encountered both Syneos Health (SYNH) and HMS Holdings (HMSY). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Both Syneos Health and HMS Holdings have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
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.
SYNH currently has a forward P/E ratio of 16.64, while HMSY has a forward P/E of 29.69. We also note that SYNH has a PEG ratio of 1.58. 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. HMSY currently has a PEG ratio of 2.70.
Another notable valuation metric for SYNH is its P/B ratio of 1.92. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HMSY has a P/B of 4.21.
These are just a few of the metrics contributing to SYNH's Value grade of B and HMSY's Value grade of C.
Both SYNH and HMSY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SYNH is the superior value option right now.
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