Investors with an interest in Medical - Outpatient and Home Healthcare stocks have likely encountered both Option Care (OPCH) and Chemed (CHE). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Option Care and Chemed are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that OPCH likely has seen a stronger improvement to its earnings outlook than CHE has recently. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

OPCH currently has a forward P/E ratio of 18.74, while CHE has a forward P/E of 23.58. We also note that OPCH has a PEG ratio of 1.67. 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. CHE currently has a PEG ratio of 2.30.

Another notable valuation metric for OPCH is its P/B ratio of 3.82. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CHE has a P/B of 7.98.

These are just a few of the metrics contributing to OPCH's Value grade of B and CHE's Value grade of C.

OPCH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that OPCH is likely the superior value option right now.

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Option Care Health, Inc. (OPCH) : 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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