Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both LHC Group (LHCG) and Addus HomeCare (ADUS). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, LHC Group has a Zacks Rank of #2 (Buy), while Addus HomeCare has a Zacks Rank of #4 (Sell). This means that LHCG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
LHCG currently has a forward P/E ratio of 26.38, while ADUS has a forward P/E of 29.35. We also note that LHCG has a PEG ratio of 1.56. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ADUS currently has a PEG ratio of 1.96.
Another notable valuation metric for LHCG is its P/B ratio of 2.47. 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, ADUS has a P/B of 3.24.
These metrics, and several others, help LHCG earn a Value grade of B, while ADUS has been given a Value grade of C.
LHCG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that LHCG is likely the superior value option right now.
LHC Group (LHCG): Free Stock Analysis Report
Addus HomeCare Corporation (ADUS): Free Stock Analysis Report
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