Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Health Care Providers & Services industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Health Care Providers & Services Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Health Care Providers & Services Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Health Care Providers & Services industry for Wednesday, October 23, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Health Care Providers & Services industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Enhabit, Inc.’s Value Grade

Value Grade:

Enhabit, Inc. provides home health and hospice services in the United States. Its home health services include patient education, pain management, wound care and dressing changes, cardiac rehabilitation, infusion therapy, pharmaceutical administration, and skilled observation and assessment services; practices to treat chronic diseases and conditions, including diabetes, hypertension, arthritis, Alzheimer’s disease, low vision, spinal stenosis, Parkinson’s disease, osteoporosis, complex wound care and chronic pain, along with disease-specific plans for patients with diabetes, congestive heart failure, post-orthopedic surgery, or injury and respiratory diseases; and physical, occupational and speech therapists provide therapy services. The company offers hospice services, including pain and symptom management, palliative and dietary counseling, social worker visits, spiritual counseling, and bereavement counseling services to meet the individual physical, emotional, spiritual, and psychosocial needs of terminally ill patients and their families. The company was formerly known as Encompass Health Home Health Holdings, Inc. and changed its name to Enhabit, Inc. in March 2022. Enhabit, Inc. was founded in 1998 and is based in Dallas, Texas.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Enhabit, Inc. has a Value Score of 72, which is considered to be undervalued.

When you look at Enhabit, Inc.’s price-to-sales ratio at 0.35 compared to the industry median at 1.00, this company has a lower price relative to revenue compared to its peers. This could make Enhabit, Inc.’s stock more attractive for value investors.

Now, let’s assess Enhabit, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 16.2, when compared to the industry median of 13.7, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Enhabit, Inc.’s shareholder yield is higher than its industry median ratio of (1.00%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Enhabit, Inc.’s price-to-book ratio is lower than its industry median ratio of 1.94. This could make Enhabit, Inc. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Enhabit, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Enhabit, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 24.25. This could make Enhabit, Inc. more attractive because the lower P/FCF ratio indicates that Enhabit, Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Fresenius Medical Care AG’s Value Grade

Value Grade:

Fresenius Medical Care AG provides dialysis and related services for individuals with renal diseases in Germany, North America, and internationally. The company offers dialysis treatment and related laboratory and diagnostic services through a network of outpatient dialysis clinics; materials, training, and patient support services comprising clinical monitoring, follow-up assistance, and arranging for delivery of the supplies to the patient’s residence; and dialysis services under contract to hospitals in the United States for the hospitalized end-stage renal disease (ESRD) patients and for patients suffering from acute kidney failure. It also develops, manufactures, and distributes various health care products, including polysulfone dialyzers, hemodialysis machines, peritoneal dialysis cyclers, peritoneal dialysis solutions, hemodialysis concentrates, solutions and granulates, bloodlines, renal pharmaceuticals, systems for water treatment, and acute cardiopulmonary and apheresis products. In addition, the company develops, acquires, and in-licenses renal pharmaceuticals; offers renal medications and supplies to patients at homes or to dialysis clinics; and provides vascular, cardiovascular, endovascular specialty, vascular care ambulatory surgery center, and physician nephrology and cardiology services. The company sells its products to dialysis clinics, hospitals, and specialized treatment clinics directly, as well as through local sales forces, independent distributors, dealers, and sales agents. Fresenius Medical Care AG was incorporated in 1996 and is headquartered in Bad Homburg, Germany.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Fresenius Medical Care AG has a Value Score of 94, which is considered to be undervalued.

Fresenius Medical Care AG’s price-earnings ratio is 10.8 compared to the industry median at 25.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Fresenius Medical Care AG more attractive for value investors.

Fresenius Medical Care AG’s price-to-book ratio is higher than its peers. This could make Fresenius Medical Care AG less attractive for value investors when compared to the industry median at 1.94.

You can read more about Fresenius Medical Care AG’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

23andMe Holding Co.’s Value Grade

Value Grade:

23andMe Holding Co. operates as a consumer genetics testing company in the United States, the United Kingdom, Canada, and internationally. The company operates in two segments, Consumer and Research Services, and Therapeutics. The Consumer and Research Services segment provides personal genome service (PGS) that consists of a suite of genetic reports, including information on customers’ genetic ancestral origins, personal genetic health risks, and chances of passing on certain rare carrier conditions to their children, as well as reports on how genetics can impact responses to medications. This segments also operates Lemonaid telehealth platform to access affiliated licensed healthcare professionals for medical consultation and treatment for various common conditions; and offers research services. The Therapeutics segment focuses on the development of novel therapies; and research and development of programs in various therapeutic areas, such as oncology, immunological and inflammatory diseases, and other disease areas, as well as engages in the out-licensing of intellectual property associated with identified drug targets and expenses related to the discovery and development of therapeutic product candidates. This segment also comprises a therapeutics product portfolio, including 23ME-00610 (P006), a humanized monoclonal antibody that interfere with the ability of CD200R1 to interact with CD200 in cancer cells; GSK6097608, an immuno-oncology program for targeting CD96; and 23ME-01473 is an immuno-oncology antibody program that targets the ULBP6 proteins in the NKG2D pathway. 23andMe Holding Co. was founded in 2006 and is headquartered in South San Francisco, California.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

23andMe Holding Co. has a Value Score of 66, which is considered to be undervalued.

23andMe Holding Co.’s price-to-book ratio is higher than its peers. This could make 23andMe Holding Co. less attractive for value investors when compared to the industry median at 1.94.

You can read more about 23andMe Holding Co.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

SBC Medical Group Holdings Incorporated’s Value Grade

Value Grade:

SBC Medical Group Holdings Incorporated provides management services to cosmetic treatment centers in Japan, Vietnam, and internationally. The company offers advertising and marketing services; staff management services, such as recruitment and training; booking reservations for franchisee clinic customers; assistance with franchisee employee housing rentals and facility rentals; construction and design of franchisee clinics; medical equipment; and medical consumables procurement. It provides breast augmentation, liposuction, and rejuvenation treatments, including treatment of wrinkles, acne, scars, cellulite, excess fat, discoloration, and signs of aging; laser skin toning and spot removal; eyes double fold surgery; rhinoplasty; treatment of osmidrosis and hyperhidrosis; hair transplants; gynecological formation treatments; laser hair removal; face line surgeries; cosmetical dental procedures; tattoo removal; lasik eye surgery; lateral canthoplasty; brow lift procedures; androgenetic alopecia treatment; and cheek sagging prevention methods. The company was founded in 2000 and is based in Irvine, California.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

SBC Medical Group Holdings Incorporated has a Value Score of 98, which is considered to be undervalued.

SBC Medical Group Holdings Incorporated’s price-earnings ratio is 0.3 compared to the industry median at 25.1. This means that it has a lower price relative to its earnings compared to its peers. This makes SBC Medical Group Holdings Incorporated more attractive for value investors.

SBC Medical Group Holdings Incorporated’s price-to-book ratio is higher than its peers. This could make SBC Medical Group Holdings Incorporated less attractive for value investors when compared to the industry median at 1.94.

You can read more about SBC Medical Group Holdings Incorporated’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Universal Health Services, Inc.’s Value Grade

Value Grade:

Universal Health Services, Inc., through its subsidiaries, owns and operates acute care hospitals, and outpatient and behavioral health care facilities. It operates through Acute Care Hospital Services and Behavioral Health Care Services segments. The company’s hospitals offer general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic and coronary care, pediatric services, pharmacy services, and/or behavioral health services. It also provides commercial health insurance services; and various management services, which include central purchasing, information, finance and control systems, facilities planning, physician recruitment, administrative personnel management, marketing, and public relations services. Universal Health Services, Inc. founded in 1978 and is headquartered in King of Prussia, Pennsylvania.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Universal Health Services, Inc. has a Value Score of 63, which is considered to be undervalued.

Universal Health Services, Inc.’s price-earnings ratio is 17.1 compared to the industry median at 25.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Universal Health Services, Inc. more attractive for value investors.

Universal Health Services, Inc.’s price-to-book ratio is lower than its peers. This could make Universal Health Services, Inc. more attractive for value investors when compared to the industry median at 1.94.

You can read more about Universal Health Services, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Health Care Providers & Services Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Health Care Providers & Services stocks as well as other industrys.

Choosing Which of the 5 Best Health Care Providers & Services Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Enhabit, Inc. stock has a Value Grade of B.
• Fresenius Medical Care AG stock has a Value Grade of A.
• 23andMe Holding Co. stock has a Value Grade of B.
• SBC Medical Group Holdings Incorporated stock has a Value Grade of A.
• Universal Health Services, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Health Care Providers & Services industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Health Care Providers & Services Stocks

Want to learn more about Health Care Providers & Services stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Health Care Providers & Services Stocks for Wednesday, October 23
• 6 Undervalued Health Care Providers & Services Stocks for Tuesday, October 22
• 6 Undervalued Health Care Providers & Services Stocks for Monday, October 21
• 7 Undervalued Health Care Providers & Services Stocks for Friday, October 18

AAII Disclaimer

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