Investors looking for stocks in the Medical - HMOs sector might want to consider either Molina (MOH) or The Joint Corp. (JYNT). 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.
Right now, Molina is sporting a Zacks Rank of #1 (Strong Buy), while The Joint Corp. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MOH likely has seen a stronger improvement to its earnings outlook than JYNT has recently. However, value investors will care about much more than just this.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
MOH currently has a forward P/E ratio of 13.53, while JYNT has a forward P/E of 73.54. We also note that MOH has a PEG ratio of 1.03. 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. JYNT currently has a PEG ratio of 7.35.
Another notable valuation metric for MOH is its P/B ratio of 5.05. 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, JYNT has a P/B of 107.65.
These metrics, and several others, help MOH earn a Value grade of A, while JYNT has been given a Value grade of D.
MOH 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 MOH is likely the superior value option right now.
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Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
The Joint Corp. (JYNT) : Free Stock Analysis Report
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