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ATGE or STRA: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Schools sector might want to consider either Adtalem Global Education (ATGE - Free Report) or Strategic Education (STRA - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Adtalem Global Education and Strategic Education are holding a Zacks Rank of # 1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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.

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.

ATGE currently has a forward P/E ratio of 10.18, while STRA has a forward P/E of 21.84. We also note that ATGE has a PEG ratio of 0.68. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. STRA currently has a PEG ratio of 1.20.

Another notable valuation metric for ATGE is its P/B ratio of 1.35. 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, STRA has a P/B of 1.48.

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

Both ATGE and STRA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATGE is the superior value option right now.


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