Investors with an interest in Schools stocks have likely encountered both Bridgepoint Education (BPI - Free Report) and Career Education (CECO - 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Bridgepoint Education has a Zacks Rank of #1 (Strong Buy), while Career Education has a Zacks Rank of #4 (Sell). This means that BPI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
BPI currently has a forward P/E ratio of 15.94, while CECO has a forward P/E of 16.16. We also note that BPI has a PEG ratio of 1.59. 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. CECO currently has a PEG ratio of 1.62.
Another notable valuation metric for BPI is its P/B ratio of 1.91. 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, CECO has a P/B of 3.04.
These are just a few of the metrics contributing to BPI's Value grade of B and CECO's Value grade of D.
BPI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BPI is likely the superior value option right now.