AMN or RTO: Which Is the Better Value Stock Right Now?

Investors interested in Business - Services stocks are likely familiar with AMN Healthcare Services (AMN) and Rentokil Initial PLC (RTO). But which of these two stocks presents investors with the better value opportunity right now? 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.

Currently, AMN Healthcare Services has a Zacks Rank of #2 (Buy), while Rentokil Initial PLC has a Zacks Rank of #5 (Strong Sell). This means that AMN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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 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.

AMN currently has a forward P/E ratio of 12.39, while RTO has a forward P/E of 26.08. We also note that AMN has a PEG ratio of 0.77. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RTO currently has a PEG ratio of 2.07.

Another notable valuation metric for AMN is its P/B ratio of 1.81. 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, RTO has a P/B of 2.64.

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

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

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

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