Back to top

Image: Bigstock

HURN vs. FC: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Consulting Services sector have probably already heard of Huron Consulting (HURN) and Franklin Covey (FC). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Huron Consulting and Franklin Covey are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HURN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

HURN currently has a forward P/E ratio of 23, while FC has a forward P/E of 91.83. We also note that HURN has a PEG ratio of 1.70. 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. FC currently has a PEG ratio of 5.65.

Another notable valuation metric for HURN is its P/B ratio of 2.57. 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, FC has a P/B of 5.53.

These metrics, and several others, help HURN earn a Value grade of B, while FC has been given a Value grade of D.

HURN stands above FC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HURN is the superior value option right now.

Published in