Yahoo Finance EHC or CHE: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either Encompass Health (EHC) or Chemed (CHE). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Encompass Health has a Zacks Rank of #2 (Buy), while Chemed has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EHC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
EHC currently has a forward P/E ratio of 20.53, while CHE has a forward P/E of 24.30. We also note that EHC has a PEG ratio of 1.31. 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. CHE currently has a PEG ratio of 2.16.
Another notable valuation metric for EHC is its P/B ratio of 3.53. 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, CHE has a P/B of 7.27.
These metrics, and several others, help EHC earn a Value grade of A, while CHE has been given a Value grade of D.
EHC 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 EHC is likely the superior value option right now.
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Encompass Health Corporation (EHC) : Free Stock Analysis Report
Chemed Corporation (CHE) : Free Stock Analysis Report
