Investors interested in stocks from the Schools sector have probably already heard of GP Strategies (GPX - Free Report) and K12 (LRN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both GP Strategies and K12 are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
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.
GPX currently has a forward P/E ratio of 9.47, while LRN has a forward P/E of 31.92. We also note that GPX has a PEG ratio of 0.63. 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. LRN currently has a PEG ratio of 2.13.
Another notable valuation metric for GPX is its P/B ratio of 1.10. 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, LRN has a P/B of 1.69.
These metrics, and several others, help GPX earn a Value grade of A, while LRN has been given a Value grade of C.
Both GPX and LRN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GPX is the superior value option right now.