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Bright Horizons Family Solutions Inc. (BFAM) - free report >>
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Bright Horizons Family Solutions Inc. (BFAM) - free report >>
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LAUR or BFAM: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Schools sector have probably already heard of Laureate Education (LAUR - Free Report) and Bright Horizons Family Solutions (BFAM - 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.
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.
Right now, Laureate Education is sporting a Zacks Rank of #2 (Buy), while Bright Horizons Family Solutions has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that LAUR likely has seen a stronger improvement to its earnings outlook than BFAM has recently. But this is only part of the picture 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 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.
LAUR currently has a forward P/E ratio of 6.62, while BFAM has a forward P/E of 41.92. We also note that LAUR has a PEG ratio of 0.55. 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. BFAM currently has a PEG ratio of 8.05.
Another notable valuation metric for LAUR is its P/B ratio of 0.63. 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, BFAM has a P/B of 6.45.
These metrics, and several others, help LAUR earn a Value grade of A, while BFAM has been given a Value grade of F.
LAUR sticks out from BFAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that LAUR is the better option right now.