Back to top

Image: Bigstock

PRDO vs. PWSC: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in stocks from the Schools sector have probably already heard of Perdoceo Education (PRDO - Free Report) and PowerSchool Holdings (PWSC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Perdoceo Education has a Zacks Rank of #2 (Buy), while PowerSchool Holdings has a Zacks Rank of #4 (Sell) right now. 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. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PRDO currently has a forward P/E ratio of 7.26, while PWSC has a forward P/E of 122. We also note that PRDO has a PEG ratio of 0.48. 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. PWSC currently has a PEG ratio of 14.39.

Another notable valuation metric for PRDO is its P/B ratio of 1.28. 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, PWSC has a P/B of 1.89.

These metrics, and several others, help PRDO earn a Value grade of A, while PWSC has been given a Value grade of D.

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

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Perdoceo Education Corporation (PRDO) - free report >>

PowerSchool Holdings, Inc. (PWSC) - free report >>

Published in