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MDRX vs. CERN: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors with an interest in Medical Info Systems stocks have likely encountered both AllScripts Healthcare (MDRX) and Cerner (CERN). 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

AllScripts Healthcare and Cerner are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MDRX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

MDRX currently has a forward P/E ratio of 17.07, while CERN has a forward P/E of 27.91. We also note that MDRX has a PEG ratio of 1.66. 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. CERN currently has a PEG ratio of 2.07.

Another notable valuation metric for MDRX is its P/B ratio of 1.33. 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, CERN has a P/B of 4.73.

These metrics, and several others, help MDRX earn a Value grade of A, while CERN has been given a Value grade of C.

MDRX has seen stronger estimate revision activity and sports more attractive valuation metrics than CERN, so it seems like value investors will conclude that MDRX is the superior option right now.


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Allscripts Healthcare Solutions, Inc. (MDRX) : Free Stock Analysis Report
 
Cerner Corporation (CERN) : Free Stock Analysis Report
 
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Zacks Investment Research