Investors looking for stocks in the Medical Info Systems sector might want to consider either AllScripts Healthcare (MDRX - Free Report) or Tabula Rasa Healthcare (TRHC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
AllScripts Healthcare has a Zacks Rank of #2 (Buy), while Tabula Rasa Healthcare has a Zacks Rank of #3 (Hold) right now. This means that MDRX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
MDRX currently has a forward P/E ratio of 16.47, while TRHC has a forward P/E of 62.12. We also note that MDRX has a PEG ratio of 1.83. 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. TRHC currently has a PEG ratio of 2.48.
Another notable valuation metric for MDRX is its P/B ratio of 1.47. 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, TRHC has a P/B of 5.98.
These metrics, and several others, help MDRX earn a Value grade of A, while TRHC has been given a Value grade of D.
MDRX stands above TRHC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MDRX is the superior value option right now.