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Investors looking for stocks in the Medical Info Systems sector might want to consider either Computer Programs and Systems (CPSI) or Omnicell (OMCL). But which of these two stocks presents investors with the better value opportunity right now? 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, Computer Programs and Systems is sporting a Zacks Rank of #1 (Strong Buy), while Omnicell has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CPSI is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
CPSI currently has a forward P/E ratio of 8.39, while OMCL has a forward P/E of 24.23. We also note that CPSI has a PEG ratio of 1.68. 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. OMCL currently has a PEG ratio of 2.42.
Another notable valuation metric for CPSI is its P/B ratio of 1.73. 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, OMCL has a P/B of 3.70.
Based on these metrics and many more, CPSI holds a Value grade of B, while OMCL has a Value grade of D.
CPSI sticks out from OMCL in both our Zacks Rank and Style Scores models, so value investors will likely feel that CPSI is the better option right now.
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