CON or ALHC: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Medical Services sector have probably already heard of Concentra Group (CON) and Alignment Healthcare (ALHC). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Concentra Group and Alignment Healthcare are holding a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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.

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 16.60, while ALHC has a forward P/E of 86.97. We also note that CON has a PEG ratio of 1.15. 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. ALHC currently has a PEG ratio of 2.29.

Another notable valuation metric for CON is its P/B ratio of 7.53. 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, ALHC has a P/B of 16.34.

These are just a few of the metrics contributing to CON's Value grade of B and ALHC's Value grade of C.

Both CON and ALHC 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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This article originally published on Zacks Investment Research (zacks.com).

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