AVAH or CHE: Which Is the Better Value Stock Right Now?

Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Aveanna Healthcare (AVAH) and Chemed (CHE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Aveanna Healthcare and Chemed are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AVAH 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

AVAH currently has a forward P/E ratio of 10.36, while CHE has a forward P/E of 18.56. We also note that AVAH has a PEG ratio of 0.70. 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 1.55.

Another notable valuation metric for AVAH is its P/B ratio of 6.22. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CHE has a P/B of 6.99.

Based on these metrics and many more, AVAH holds a Value grade of A, while CHE has a Value grade of C.

AVAH sticks out from CHE in both our Zacks Rank and Style Scores models, so value investors will likely feel that AVAH is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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