Back to top

Image: Bigstock

ATGE vs. TAL: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Schools sector have probably already heard of Adtalem Global Education (ATGE) and TAL Education (TAL - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Adtalem Global Education has a Zacks Rank of #2 (Buy), while TAL Education has a Zacks Rank of #3 (Hold) right now. This means that ATGE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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 14.47, while TAL has a forward P/E of 85.30. We also note that ATGE has a PEG ratio of 1.16. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TAL currently has a PEG ratio of 3.41.

Another notable valuation metric for ATGE is its P/B ratio of 1.52. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TAL has a P/B of 11.85.

Based on these metrics and many more, ATGE holds a Value grade of B, while TAL has a Value grade of F.

ATGE is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ATGE is likely the superior value option right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

TAL Education Group (TAL) - free report >>

Published in