Investors with an interest in Schools stocks have likely encountered both Bridgepoint Education (BPI - Free Report) and Strayer 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Bridgepoint Education is sporting a Zacks Rank of #1 (Strong Buy), while Strayer Education has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BPI has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
BPI currently has a forward P/E ratio of 20.48, while STRA has a forward P/E of 28.92. We also note that BPI has a PEG ratio of 2.05. 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. STRA currently has a PEG ratio of 2.89.
Another notable valuation metric for BPI is its P/B ratio of 2.46. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, STRA has a P/B of 6.10.
These are just a few of the metrics contributing to BPI's Value grade of B and STRA's Value grade of C.
BPI sticks out from STRA in both our Zacks Rank and Style Scores models, so value investors will likely feel that BPI is the better option right now.