Investors interested in Medical Services stocks are likely familiar with Concentra Group (CON) and Medpace (MEDP). 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.
Concentra Group has a Zacks Rank of #2 (Buy), while Medpace has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CON is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
CON currently has a forward P/E ratio of 22.74, while MEDP has a forward P/E of 34.77. We also note that CON has a PEG ratio of 1.37. 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. MEDP currently has a PEG ratio of 2.72.
Another notable valuation metric for CON is its P/B ratio of 9.91. 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, MEDP has a P/B of 39.24.
These are just a few of the metrics contributing to CON's Value grade of B and MEDP's Value grade of D.
CON 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 CON is likely the superior value option right now.
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Concentra Group Holdings Parent, Inc. (CON): Free Stock Analysis Report
Medpace Holdings, Inc. (MEDP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).