Investors looking for stocks in the Medical Services sector might want to consider either Icon PLC (ICLR) or GoodRx Holdings, Inc. (GDRX). 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.
Right now, Icon PLC is sporting a Zacks Rank of #2 (Buy), while GoodRx Holdings, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ICLR likely has seen a stronger improvement to its earnings outlook than GDRX has recently. But this is only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ICLR currently has a forward P/E ratio of 20.56, while GDRX has a forward P/E of 21.91. We also note that ICLR has a PEG ratio of 1.42. 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. GDRX currently has a PEG ratio of 1.69.
Another notable valuation metric for ICLR is its P/B ratio of 2.44. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GDRX has a P/B of 2.55.
Based on these metrics and many more, ICLR holds a Value grade of B, while GDRX has a Value grade of C.
ICLR 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 ICLR is likely the superior value option right now.
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