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TAL vs. LINC: Which Stock Is the Better Value Option?

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Investors with an interest in Schools stocks have likely encountered both TAL Education (TAL - Free Report) and Lincoln Educational Services Corporation (LINC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

TAL Education and Lincoln Educational Services Corporation are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.

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.

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.

TAL currently has a forward P/E ratio of 27.91, while LINC has a forward P/E of 28.70. We also note that TAL has a PEG ratio of 0.61. 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. LINC currently has a PEG ratio of 1.91.

Another notable valuation metric for TAL is its P/B ratio of 1.84. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LINC has a P/B of 3.79.

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

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


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