Investors interested in Medical Services stocks are likely familiar with GoodRx Holdings, Inc. (GDRX) and HealthEquity (HQY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
GoodRx Holdings, Inc. and HealthEquity are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GDRX likely has seen a stronger improvement to its earnings outlook than HQY has recently. But this is just one factor that value investors are interested in.
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.
GDRX currently has a forward P/E ratio of 9.90, while HQY has a forward P/E of 20.59. We also note that GDRX has a PEG ratio of 0.76. 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 1.36.
Another notable valuation metric for GDRX is its P/B ratio of 1.67. 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 3.96.
These are just a few of the metrics contributing to GDRX's Value grade of A and HQY's Value grade of D.
GDRX has seen stronger estimate revision activity and sports more attractive valuation metrics than HQY, so it seems like value investors will conclude that GDRX is the superior option right now.
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GoodRx Holdings, Inc. (GDRX): Free Stock Analysis Report
HealthEquity, Inc. (HQY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).