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

Zacks Equity Research
Updated
DG vs. TJX: Which Stock Is the Better Value Option?

Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both Addus HomeCare (ADUS) and 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Addus HomeCare has a Zacks Rank of #1 (Strong Buy), while U.S. Physical Therapy has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ADUS 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 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.

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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.

ADUS currently has a forward P/E ratio of 26.22, while USPH has a forward P/E of 39.67. We also note that ADUS has a PEG ratio of 1.75. 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 3.53.

Another notable valuation metric for ADUS is its P/B ratio of 3.75. 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 5.84.

These metrics, and several others, help ADUS earn a Value grade of B, while USPH has been given a Value grade of C.

ADUS stands above USPH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ADUS is the superior value option right now.


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Addus HomeCare Corporation (ADUS) : Free Stock Analysis Report
 
U.S. Physical Therapy, Inc. (USPH) : Free Stock Analysis Report
 
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Zacks Investment Research