Investors with an interest in Medical Services stocks have likely encountered both Syneos Health (SYNH) and HealthEquity (HQY). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Right now, Syneos Health is sporting a Zacks Rank of #2 (Buy), while HealthEquity has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SYNH has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
SYNH currently has a forward P/E ratio of 22.24, while HQY has a forward P/E of 108.33. We also note that SYNH has a PEG ratio of 1.27. 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. HQY currently has a PEG ratio of 3.26.
Another notable valuation metric for SYNH is its P/B ratio of 1.92. 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, HQY has a P/B of 12.02.
These are just a few of the metrics contributing to SYNH's Value grade of B and HQY's Value grade of F.
SYNH stands above HQY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SYNH is the superior value option right now.
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INC Research Holdings, Inc. (SYNH) : Free Stock Analysis Report
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