Investors interested in Medical Services stocks are likely familiar with Elevance Health (ELV) and Doximity (DOCS). 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.
Right now, Elevance Health is sporting a Zacks Rank of #2 (Buy), while Doximity has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ELV is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
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.
ELV currently has a forward P/E ratio of 15.06, while DOCS has a forward P/E of 41.99. We also note that ELV has a PEG ratio of 1.24. 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. DOCS currently has a PEG ratio of 11.41.
Another notable valuation metric for ELV is its P/B ratio of 3.25. 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, DOCS has a P/B of 7.07.
These are just a few of the metrics contributing to ELV's Value grade of A and DOCS's Value grade of D.
ELV sticks out from DOCS in both our Zacks Rank and Style Scores models, so value investors will likely feel that ELV is the better option right now.
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