U.S. Markets closed

TVTY vs. PRAH: Which Stock Is the Better Value Option?

Zacks Equity Research
Town Sports (CLUB) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors looking for stocks in the Medical Services sector might want to consider either Tivity Health (TVTY) or PRA Health Sciences (PRAH). 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.

Currently, Tivity Health has a Zacks Rank of #2 (Buy), while PRA Health Sciences has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TVTY has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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.

TVTY currently has a forward P/E ratio of 10.46, while PRAH has a forward P/E of 17.82. We also note that TVTY has a PEG ratio of 0.95. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PRAH currently has a PEG ratio of 1.01.

Another notable valuation metric for TVTY is its P/B ratio of 2.89. 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, PRAH has a P/B of 5.78.

These are just a few of the metrics contributing to TVTY's Value grade of A and PRAH's Value grade of C.

TVTY sticks out from PRAH in both our Zacks Rank and Style Scores models, so value investors will likely feel that TVTY is the better 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
 
Healthways, Inc. (TVTY) : Free Stock Analysis Report
 
PRA Health Sciences, Inc. (PRAH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.