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Should Value Investors Buy Computer Programs and Systems (CPSI) Stock?

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Computer Programs and Systems (CPSI). CPSI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 11.68 right now. For comparison, its industry sports an average P/E of 33.74. Over the past 52 weeks, CPSI's Forward P/E has been as high as 16.52 and as low as 10.87, with a median of 12.64.

CPSI is also sporting a PEG ratio of 1.13. 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. CPSI's industry has an average PEG of 2.43 right now. Within the past year, CPSI's PEG has been as high as 1.55 and as low as 1.05, with a median of 1.22.

We should also highlight that CPSI has a P/B ratio of 2.42. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.85. CPSI's P/B has been as high as 3.35 and as low as 2.26, with a median of 2.70, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CPSI has a P/S ratio of 1.28. This compares to its industry's average P/S of 2.58.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Computer Programs and Systems is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CPSI feels like a great value stock at the moment.


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