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ELV vs. HQY: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Medical Services sector might want to consider either Elevance Health (ELV - Free Report) or HealthEquity (HQY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Both Elevance Health and HealthEquity have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

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.

ELV currently has a forward P/E ratio of 13.64, while HQY has a forward P/E of 35.49. We also note that ELV has a PEG ratio of 1.13. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HQY currently has a PEG ratio of 1.51.

Another notable valuation metric for ELV is its P/B ratio of 2.74. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HQY has a P/B of 3.14.

Based on these metrics and many more, ELV holds a Value grade of A, while HQY has a Value grade of D.

Both ELV and HQY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ELV is the superior value option right now.


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