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

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Investors interested in stocks from the Schools sector have probably already heard of Lincoln Educational Services Corporation (LINC - Free Report) and PowerSchool Holdings (PWSC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

Lincoln Educational Services Corporation has a Zacks Rank of #1 (Strong Buy), while PowerSchool Holdings has a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LINC has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

LINC currently has a forward P/E ratio of 11.71, while PWSC has a forward P/E of 28.53. We also note that LINC has a PEG ratio of 0.87. 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. PWSC currently has a PEG ratio of 8.27.

Another notable valuation metric for LINC is its P/B ratio of 1.54. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PWSC has a P/B of 1.97.

Based on these metrics and many more, LINC holds a Value grade of A, while PWSC has a Value grade of D.

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


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