Investors looking for stocks in the Schools sector might want to consider either Bridgepoint Education (BPI - Free Report) or Strategic Education (STRA - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Right now, both Bridgepoint Education and Strategic Education are sporting a Zacks Rank of # 1 (Strong Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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 20.11, while STRA has a forward P/E of 30.33. We also note that BPI has a PEG ratio of 2.01. 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 3.03.
Another notable valuation metric for BPI is its P/B ratio of 2.41. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, STRA has a P/B of 6.95.
These are just a few of the metrics contributing to BPI's Value grade of B and STRA's Value grade of D.
Both BPI and STRA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BPI is the superior value option right now.