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

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Investors interested in Schools stocks are likely familiar with Strategic Education (STRA - Free Report) and TAL Education (TAL - 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.

Strategic Education and TAL Education are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that STRA is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 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.

STRA currently has a forward P/E ratio of 14.57, while TAL has a forward P/E of 152. We also note that STRA has a PEG ratio of 1.45. 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. TAL currently has a PEG ratio of 4.59.

Another notable valuation metric for STRA is its P/B ratio of 1.27. 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, TAL has a P/B of 10.06.

These are just a few of the metrics contributing to STRA's Value grade of B and TAL's Value grade of D.

STRA stands above TAL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STRA is the superior value option right now.


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