Investors interested in stocks from the Medical – Products sector have probably already heard of AdaptHealth Corp. (AHCO) and Stryker (SYK). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
AdaptHealth Corp. has a Zacks Rank of #2 (Buy), while Stryker has a Zacks Rank of #4 (Sell) right now. This means that AHCO’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
AHCO currently has a forward P/E ratio of 16.83, while SYK has a forward P/E of 28.87. We also note that AHCO has a PEG ratio of 0.52. 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. SYK currently has a PEG ratio of 3.17.
Another notable valuation metric for AHCO is its P/B ratio of 1.53. 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, SYK has a P/B of 7.01.
These are just a few of the metrics contributing to AHCO’s Value grade of B and SYK’s Value grade of C.
AHCO sticks out from SYK in both our Zacks Rank and Style Scores models, so value investors will likely feel that AHCO is the better option right now.
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