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AFYA vs. PWSC: Which Stock Is the Better Value Option?

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Investors with an interest in Schools stocks have likely encountered both Afya (AFYA - Free Report) and PowerSchool Holdings (PWSC - 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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Afya has a Zacks Rank of #1 (Strong Buy), while PowerSchool Holdings has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AFYA is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

AFYA currently has a forward P/E ratio of 9.09, while PWSC has a forward P/E of 17.43. We also note that AFYA has a PEG ratio of 0.28. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PWSC currently has a PEG ratio of 1.83.

Another notable valuation metric for AFYA is its P/B ratio of 1.52. 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, PWSC has a P/B of 1.53.

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

AFYA 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 AFYA is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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Afya Limited (AFYA) - free report >>

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