AMED vs. USPH: Which Stock Is the Better Value Option?

Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either Amedisys AMED or U.S. Physical Therapy USPH. But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Amedisys has a Zacks Rank of #2 (Buy), while U.S. Physical Therapy has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that AMED likely has seen a stronger improvement to its earnings outlook than USPH has recently. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

AMED currently has a forward P/E ratio of 21.14, while USPH has a forward P/E of 34.11. We also note that AMED has a PEG ratio of 2.37. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. USPH currently has a PEG ratio of 3.77.

Another notable valuation metric for AMED is its P/B ratio of 2.80. 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, USPH has a P/B of 3.04.

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

AMED is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AMED is likely the superior value option right now.

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