Investors interested in stocks from the Schools sector have probably already heard of Adtalem Global Education (ATGE - 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.
Right now, both Adtalem Global Education and Bright Horizons Family Solutions are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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.
ATGE currently has a forward P/E ratio of 19.81, while BFAM has a forward P/E of 37.50. We also note that ATGE has a PEG ratio of 1.50. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BFAM currently has a PEG ratio of 3.12.
Another notable valuation metric for ATGE is its P/B ratio of 2.30. 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, BFAM has a P/B of 8.79.
These are just a few of the metrics contributing to ATGE's Value grade of B and BFAM's Value grade of D.
Both ATGE and BFAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATGE is the superior value option right now.