PSN or WDH: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Technology Services sector have probably already heard of Parsons (PSN) and Waterdrop Inc. Unsponsored ADR (WDH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
Parsons and Waterdrop Inc. Unsponsored ADR are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PSN'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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PSN currently has a forward P/E ratio of 20.73, while WDH has a forward P/E of 28.70. We also note that PSN has a PEG ratio of 1.86. 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. WDH currently has a PEG ratio of 23.91.
Another notable valuation metric for PSN is its P/B ratio of 2.32. 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, WDH has a P/B of 19.82.
These are just a few of the metrics contributing to PSN's Value grade of B and WDH's Value grade of F.
PSN stands above WDH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PSN is the superior value option right now.
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Parsons Corporation (PSN) : Free Stock Analysis Report
Waterdrop Inc. Unsponsored ADR (WDH) : Free Stock Analysis Report
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