Investors interested in Medical Services stocks are likely familiar with Concentra Group (CON) and Medpace (MEDP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Concentra Group is sporting a Zacks Rank of #2 (Buy), while Medpace has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CON has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CON currently has a forward P/E ratio of 20.30, while MEDP has a forward P/E of 31.47. We also note that CON has a PEG ratio of 1.41. 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 9.19. 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, MEDP has a P/B of 25.59.
These are just a few of the metrics contributing to CON's Value grade of B and MEDP's Value grade of D.
CON stands above MEDP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CON is 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).