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MD or HQY: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical Services sector might want to consider either Pediatrix Medical Group (MD - 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 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, both Pediatrix Medical Group and HealthEquity are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
MD currently has a forward P/E ratio of 9.92, while HQY has a forward P/E of 28.42. We also note that MD has a PEG ratio of 1.04. 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. HQY currently has a PEG ratio of 1.16.
Another notable valuation metric for MD is its P/B ratio of 1.68. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HQY has a P/B of 4.31.
These metrics, and several others, help MD earn a Value grade of A, while HQY has been given a Value grade of C.
Both MD and HQY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MD is the superior value option right now.