CON vs. MEDP: Which Stock Is the Better Value Option?

Investors interested in stocks from the Medical Services sector have probably already heard of Concentra Group (CON) and Medpace (MEDP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Concentra Group and Medpace are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that CON's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

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.

CON currently has a forward P/E ratio of 20.95, while MEDP has a forward P/E of 33.25. We also note that CON has a PEG ratio of 1.26. 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. MEDP currently has a PEG ratio of 2.60.

Another notable valuation metric for CON is its P/B ratio of 9.04. 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, MEDP has a P/B of 37.52.

These are just a few of the metrics contributing to CON's Value grade of B and MEDP's Value grade of D.

CON has seen stronger estimate revision activity and sports more attractive valuation metrics than MEDP, so it seems like value investors will conclude that CON is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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