Investors with an interest in Medical Services stocks have likely encountered both 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.
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.
Concentra Group and Medpace are both sporting a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
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 21.70, while MEDP has a forward P/E of 35.07. We also note that CON has a PEG ratio of 1.30. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MEDP currently has a PEG ratio of 2.74.
Another notable valuation metric for CON is its P/B ratio of 9.18. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MEDP has a P/B of 39.5.
These are just a few of the metrics contributing to CON's Value grade of B and MEDP's Value grade of D.
Both CON and MEDP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we 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).