Investors seeking opportunities in the Medical Services sector are likely familiar with HealthEquity (HQY) and Medpace (MEDP). But which of these companies presents the more compelling value proposition? To uncover undervalued gems, we combine the power of the Zacks Rank with the insightful Value category of our Style Scores system.
HealthEquity currently boasts a Zacks Rank of #2 (Buy), indicating positive earnings estimate revision trends. This suggests strong analyst confidence in the company’s future performance. Meanwhile, Medpace holds a Zacks Rank of #3 (Hold), signifying a less impressive earnings outlook.
However, value investors delve deeper than just earnings estimates. They meticulously analyze a range of traditional financial metrics to gauge a company’s true worth. Our Value category shines a light on undervalued companies by scrutinizing metrics like the P/E ratio, P/S ratio, earnings yield, cash flow per share, and other fundamental indicators.
HealthEquity exhibits a forward P/E ratio of 24.80, compared to Medpace’s forward P/E of 29.12. This suggests that HealthEquity’s stock is trading at a lower price relative to its earnings compared to Medpace. Furthermore, HealthEquity boasts a PEG ratio of 0.88, a metric similar to the P/E ratio but incorporating expected earnings growth. Medpace’s PEG ratio sits at 1.76, indicating a higher valuation relative to its growth prospects.
Another significant valuation metric is the P/B ratio, which compares a company’s market value to its book value. HealthEquity’s P/B ratio of 3.09 suggests a more attractive valuation than Medpace’s P/B of 13.78.
These metrics, along with others, have earned HealthEquity a Value grade of B, while Medpace received a Value grade of C.
In conclusion, HealthEquity’s improving earnings outlook and favorable valuation metrics make it the more compelling value option in our current analysis.
