Investors interested in stocks from the Schools sector have probably already heard of Laureate Education and Adtalem Global Education (ATGE - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Laureate Education has a Zacks Rank of #2 (Buy), while Adtalem Global Education has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LAUR has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
LAUR currently has a forward P/E ratio of 7.09, while ATGE has a forward P/E of 16.98. We also note that LAUR has a PEG ratio of 0.59. 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. ATGE currently has a PEG ratio of 1.28.
Another notable valuation metric for LAUR is its P/B ratio of 1.57. 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, ATGE has a P/B of 1.87.
Based on these metrics and many more, LAUR holds a Value grade of B, while ATGE has a Value grade of D.
LAUR stands above ATGE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LAUR is the superior value option right now.