Back to top

Image: Bigstock

VTRU vs. AFYA: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Schools stocks have likely encountered both Vitru Limited (VTRU - Free Report) and Afya (AFYA - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Vitru Limited has a Zacks Rank of #1 (Strong Buy), while Afya has a Zacks Rank of #2 (Buy) right now. This means that VTRU'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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

VTRU currently has a forward P/E ratio of 2.45, while AFYA has a forward P/E of 16.54. We also note that VTRU has a PEG ratio of 0.08. 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. AFYA currently has a PEG ratio of 0.67.

Another notable valuation metric for VTRU is its P/B ratio of 1.83. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, AFYA has a P/B of 2.52.

These metrics, and several others, help VTRU earn a Value grade of B, while AFYA has been given a Value grade of C.

VTRU 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 VTRU is likely the superior value option right now.

In-Depth Zacks Research for the Tickers Above

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

Afya Limited (AFYA) - free report >>

Vitru Limited (VTRU) - free report >>

Published in