Investors interested in stocks from the Medical Services sector have probably already heard of 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.
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. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
CON currently has a forward P/E ratio of 22.03, while MEDP has a forward P/E of 33.73. We also note that CON has a PEG ratio of 1.53. 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 2.64.
Another notable valuation metric for CON is its P/B ratio of 8.99. 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 38.
Based on these metrics and many more, CON holds a Value grade of B, while MEDP has a 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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