AVAH vs. CHE: Which Stock Is the Better Value Option?

Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either Aveanna Healthcare (AVAH) or Chemed (CHE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Aveanna Healthcare and Chemed are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AVAH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

AVAH currently has a forward P/E ratio of 11.76, while CHE has a forward P/E of 18.27. We also note that AVAH has a PEG ratio of 0.79. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CHE currently has a PEG ratio of 1.53.

Another notable valuation metric for AVAH is its P/B ratio of 6.64. 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, CHE has a P/B of 6.88.

Based on these metrics and many more, AVAH holds a Value grade of A, while CHE has a Value grade of C.

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

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Aveanna Healthcare Holdings Inc. (AVAH) : Free Stock Analysis Report

Chemed Corporation (CHE) : Free Stock Analysis Report

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

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