Investors interested in stocks from the Schools sector have probably already heard of Laureate Education (LAUR - Free Report) and Strategic Education (STRA - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Laureate Education is sporting a Zacks Rank of #2 (Buy), while Strategic Education has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that LAUR likely has seen a stronger improvement to its earnings outlook than STRA has recently. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
LAUR currently has a forward P/E ratio of 3.11, while STRA has a forward P/E of 19.42. We also note that LAUR has a PEG ratio of 0.26. 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. STRA currently has a PEG ratio of 1.29.
Another notable valuation metric for LAUR is its P/B ratio of 1.13. 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, STRA has a P/B of 1.97.
These are just a few of the metrics contributing to LAUR's Value grade of B and STRA's Value grade of D.
LAUR stands above STRA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LAUR is the superior value option right now.