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LOPE vs. BFAM: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Schools sector might want to consider either Grand Canyon Education (LOPE - Free Report) or Bright Horizons Family Solutions (BFAM - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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

Currently, Grand Canyon Education has a Zacks Rank of #2 (Buy), while Bright Horizons Family Solutions has a Zacks Rank of #3 (Hold). This means that LOPE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

LOPE currently has a forward P/E ratio of 18.20, while BFAM has a forward P/E of 134.27. We also note that LOPE has a PEG ratio of 1.21. 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. BFAM currently has a PEG ratio of 24.41.

Another notable valuation metric for LOPE is its P/B ratio of 3.16. 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, BFAM has a P/B of 7.47.

These metrics, and several others, help LOPE earn a Value grade of B, while BFAM has been given a Value grade of D.

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


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Grand Canyon Education, Inc. (LOPE) - free report >>

Bright Horizons Family Solutions Inc. (BFAM) - free report >>

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