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

Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Addus HomeCare (ADUS) and U.S. Physical Therapy (USPH). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 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, Addus HomeCare is sporting a Zacks Rank of #2 (Buy), while U.S. Physical Therapy has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ADUS has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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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.

ADUS currently has a forward P/E ratio of 19.97, while USPH has a forward P/E of 35.19. We also note that ADUS has a PEG ratio of 1.72. 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 4.62.

Another notable valuation metric for ADUS is its P/B ratio of 2.23. 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, USPH has a P/B of 3.06.

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

ADUS has seen stronger estimate revision activity and sports more attractive valuation metrics than USPH, so it seems like value investors will conclude that ADUS is the superior 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