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Amedisys or Chemed: Which is a Better Investment Choice?
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Since the change in political power in the United States, it has been quite a rough phase for MedTech. Things started getting worse after President Trump started proceeding with his plans to repeal Obamacare. After a series of futile attempts, the Republicans resorted to a “skinny repeal” of Obamacare which failed as well. Now, the Republicans are back with the latest Graham-Cassidy bill targeting the termination of Obamacare. While investors are busy gauging the extent of the impact of the latest Graham-Cassidy legislation on the Medical Device space, there have been a few encouraging developments in the sub industry.
Meanwhile, the 18-company Zacks Outpatient Healthcare Industry, an integral part of the Medical Device space, currently has better prospects as is evident from its Zacks Industry Rank of #38. This places the sub industry in the top 15% of 256-plus Zacks industries. Our back-testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Thus, it will be prudent for investors to pick stocks from the fundamentally-strong sub industry at the moment. We have chosen Amedisys, Inc. (AMED - Free Report) and Chemed Corporation (CHE - Free Report) based on a favorable Zacks Rank #2 (Buy).
Amedisys with a market cap of $1.74 billion, is one of the leading providers of healthcare services in the United States. The company operates through three segments — Home Health, Hospice, and Personal Care.
Meanwhile, Chemed , with a market cap of $3.05 billion, is another leading provider of hospice and palliative care services in the nation. The company operates through two segments — VITAS and Roto-Rooter.
Let us now do a comparative analysis of these stocks before making the final call.
Amedisys has a VGM Score of A as compared to Chemed’s C. Under the Zack Style Score system, V stands for Value, G for Growth and M for Momentum. The VGM Score is simply a weighted combination of these parameters and is a comprehensive tool that allows investors to filter through the standard scoring system and pick the winning stocks.
Amedisys also has a favorable Price/Earnings to Growth (PEG) ratio of 1.25 as compared with Chemed’s 2.29. Amedisys also stands strong when compared to the broader industry’s 1.94.
With an attractive three-to-five years projected earnings growth rate of 18.2%, Amedisys again scores higher than Chemed’s 10% and the industry’s 12.3%.
Amedisys also boasts better leverage ratios when compared to Chemed and the broader industry. Amedisys has a favorable Debt/Equity ratio of 0.17 as compared to Chemed’s 0.25 and the industry’s 0.37. Again, Long-Term Debt/Capital ratio metric at 14.4 stands in favor of Amedisys when it comes to a comparison with Chemed’s 16.9 and 55.1 of the broader industry.
Amedisys’ estimate revision trend for the current year has also been attractive when compared to Chemed. In the past 60 days, five estimates moved north, with no movement in the opposite direction for Amedisys. The magnitude of estimate revision for earnings increased around 5.7% to $2.21 over the same time frame. For Chemed, one estimate moved north, with no movement in the opposite direction over the past 60 days. The magnitude of estimate revision for earnings increased only 3.3% to $8.20 over the same time frame.
Based on our detailed analysis, we can safely conclude that Amedisys makes a superior pick for your portfolio at the moment.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 17% over the last six months.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 39.9% over the last year.
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Amedisys or Chemed: Which is a Better Investment Choice?
Since the change in political power in the United States, it has been quite a rough phase for MedTech. Things started getting worse after President Trump started proceeding with his plans to repeal Obamacare. After a series of futile attempts, the Republicans resorted to a “skinny repeal” of Obamacare which failed as well. Now, the Republicans are back with the latest Graham-Cassidy bill targeting the termination of Obamacare. While investors are busy gauging the extent of the impact of the latest Graham-Cassidy legislation on the Medical Device space, there have been a few encouraging developments in the sub industry.
Meanwhile, the 18-company Zacks Outpatient Healthcare Industry, an integral part of the Medical Device space, currently has better prospects as is evident from its Zacks Industry Rank of #38. This places the sub industry in the top 15% of 256-plus Zacks industries. Our back-testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Thus, it will be prudent for investors to pick stocks from the fundamentally-strong sub industry at the moment. We have chosen Amedisys, Inc. (AMED - Free Report) and Chemed Corporation (CHE - Free Report) based on a favorable Zacks Rank #2 (Buy).
Amedisys with a market cap of $1.74 billion, is one of the leading providers of healthcare services in the United States. The company operates through three segments — Home Health, Hospice, and Personal Care.
Meanwhile, Chemed , with a market cap of $3.05 billion, is another leading provider of hospice and palliative care services in the nation. The company operates through two segments — VITAS and Roto-Rooter.
Let us now do a comparative analysis of these stocks before making the final call.
Amedisys has a VGM Score of A as compared to Chemed’s C. Under the Zack Style Score system, V stands for Value, G for Growth and M for Momentum. The VGM Score is simply a weighted combination of these parameters and is a comprehensive tool that allows investors to filter through the standard scoring system and pick the winning stocks.
Amedisys also has a favorable Price/Earnings to Growth (PEG) ratio of 1.25 as compared with Chemed’s 2.29. Amedisys also stands strong when compared to the broader industry’s 1.94.
Amedisys Inc PEG Ratio (TTM)
Amedisys Inc PEG Ratio (TTM) | Amedisys Inc Quote
Chemed Corp. PEG Ratio (TTM)
Chemed Corp. PEG Ratio (TTM) | Chemed Corp. Quote
With an attractive three-to-five years projected earnings growth rate of 18.2%, Amedisys again scores higher than Chemed’s 10% and the industry’s 12.3%.
Amedisys also boasts better leverage ratios when compared to Chemed and the broader industry. Amedisys has a favorable Debt/Equity ratio of 0.17 as compared to Chemed’s 0.25 and the industry’s 0.37. Again, Long-Term Debt/Capital ratio metric at 14.4 stands in favor of Amedisys when it comes to a comparison with Chemed’s 16.9 and 55.1 of the broader industry.
Amedisys’ estimate revision trend for the current year has also been attractive when compared to Chemed. In the past 60 days, five estimates moved north, with no movement in the opposite direction for Amedisys. The magnitude of estimate revision for earnings increased around 5.7% to $2.21 over the same time frame. For Chemed, one estimate moved north, with no movement in the opposite direction over the past 60 days. The magnitude of estimate revision for earnings increased only 3.3% to $8.20 over the same time frame.
Based on our detailed analysis, we can safely conclude that Amedisys makes a superior pick for your portfolio at the moment.
Other Key Picks
Other top-ranked medical stocks are Edwards Lifesciences Corporation (EW - Free Report) and IDEXX Laboratories, Inc (IDXX - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while IDEXX carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 17% over the last six months.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 39.9% over the last year.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
See these buy recommendations now >>