Investors interested in Schools stocks are likely familiar with Grand Canyon Education (LOPE - Free Report) and Bright Horizons Family Solutions (BFAM - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Grand Canyon Education and Bright Horizons Family Solutions 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. But this is just one piece of the puzzle 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.
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.
LOPE currently has a forward P/E ratio of 23.30, while BFAM has a forward P/E of 31.98. We also note that LOPE has a PEG ratio of 1.41. 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. BFAM currently has a PEG ratio of 2.13.
Another notable valuation metric for LOPE is its P/B ratio of 5.16. 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, BFAM has a P/B of 7.92.
Based on these metrics and many more, LOPE holds a Value grade of B, while BFAM has a Value grade of C.
Both LOPE and BFAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LOPE is the superior value option right now.