Investors interested in stocks from the Schools sector have probably already heard of Adtalem Global Education (ATGE - Free Report) and Strategic Education (STRA - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Adtalem Global Education and Strategic Education are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ATGE likely has seen a stronger improvement to its earnings outlook than STRA has recently. But this is only part of the picture 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ATGE currently has a forward P/E ratio of 16.83, while STRA has a forward P/E of 22.92. We also note that ATGE has a PEG ratio of 1.27. 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. STRA currently has a PEG ratio of 1.53.
Another notable valuation metric for ATGE is its P/B ratio of 1.97. 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, STRA has a P/B of 2.11.
These are just a few of the metrics contributing to ATGE's Value grade of A and STRA's Value grade of C.
ATGE stands above STRA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ATGE is the superior value option right now.