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PRDO or STRA: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Schools sector have probably already heard of Perdoceo Education (PRDO - Free Report) and Strategic Education (STRA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Perdoceo Education is sporting a Zacks Rank of #2 (Buy), while Strategic Education has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PRDO is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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.

PRDO currently has a forward P/E ratio of 8.04, while STRA has a forward P/E of 21.85. We also note that PRDO has a PEG ratio of 0.54. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. STRA currently has a PEG ratio of 1.05.

Another notable valuation metric for PRDO is its P/B ratio of 1.33. 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, STRA has a P/B of 1.45.

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

PRDO has seen stronger estimate revision activity and sports more attractive valuation metrics than STRA, so it seems like value investors will conclude that PRDO is the superior option right now.


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