Investors interested in Medical Info Systems stocks are likely familiar with Omnicell (OMCL) and Hims & Hers Health, Inc. (HIMS). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Omnicell has a Zacks Rank of #1 (Strong Buy), while Hims & Hers Health, Inc. has a Zacks Rank of #5 (Strong Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OMCL is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
OMCL currently has a forward P/E ratio of 20.03, while HIMS has a forward P/E of 623.05. We also note that OMCL has a PEG ratio of 0.68. 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. HIMS currently has a PEG ratio of 46.76.
Another notable valuation metric for OMCL is its P/B ratio of 1.43. 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, HIMS has a P/B of 16.91.
Based on these metrics and many more, OMCL holds a Value grade of B, while HIMS has a Value grade of F.
OMCL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that OMCL is likely the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).