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AMN or HQY: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Medical Services stocks are likely familiar with AMN Healthcare Services (AMN) and HealthEquity (HQY). 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.

AMN Healthcare Services has a Zacks Rank of #2 (Buy), while HealthEquity has a Zacks Rank of #3 (Hold) right now. This means that AMN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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 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.

AMN currently has a forward P/E ratio of 21.76, while HQY has a forward P/E of 45.42. We also note that AMN has a PEG ratio of 1.74. 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. HQY currently has a PEG ratio of 1.81.

Another notable valuation metric for AMN is its P/B ratio of 4.80. 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, HQY has a P/B of 5.43.

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

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


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Zacks Investment Research