Investors looking for stocks in the Schools sector might want to consider either Perdoceo Education (PRDO - Free Report) or Grand Canyon Education (LOPE - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Perdoceo Education is sporting a Zacks Rank of #1 (Strong Buy), while Grand Canyon Education has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PRDO is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
PRDO currently has a forward P/E ratio of 10.38, while LOPE has a forward P/E of 16.95. We also note that PRDO has a PEG ratio of 0.69. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LOPE currently has a PEG ratio of 1.13.
Another notable valuation metric for PRDO is its P/B ratio of 2.43. 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, LOPE has a P/B of 2.96.
Based on these metrics and many more, PRDO holds a Value grade of A, while LOPE has a Value grade of C.
PRDO sticks out from LOPE in both our Zacks Rank and Style Scores models, so value investors will likely feel that PRDO is the better option right now.