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Stride, Inc. (LRN) - free report >>
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Stride, Inc. (LRN) - free report >>
Bright Horizons Family Solutions Inc. (BFAM) - free report >>
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LRN vs. BFAM: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Schools sector have probably already heard of K12 (LRN - Free Report) and 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 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.
Currently, K12 has a Zacks Rank of #1 (Strong Buy), while Bright Horizons Family Solutions has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that LRN likely has seen a stronger improvement to its earnings outlook than BFAM has recently. 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.
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.
LRN currently has a forward P/E ratio of 14.16, while BFAM has a forward P/E of 36.54. We also note that LRN has a PEG ratio of 0.71. 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 1.78.
Another notable valuation metric for LRN is its P/B ratio of 1.98. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BFAM has a P/B of 6.29.
These are just a few of the metrics contributing to LRN's Value grade of B and BFAM's Value grade of D.
LRN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that LRN is likely the superior value option right now.