ATGE or STRA: Which Is the Better Value Stock Right Now?
Investors with an interest in Schools stocks have likely encountered both Adtalem Global Education (ATGE) and Strategic Education (STRA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, Adtalem Global Education is sporting a Zacks Rank of #2 (Buy), while Strategic 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 ATGE is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ATGE currently has a forward P/E ratio of 16.14, while STRA has a forward P/E of 22.11. We also note that ATGE has a PEG ratio of 1.22. 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 1.47.
Another notable valuation metric for ATGE is its P/B ratio of 1.89. 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 2.04.
These are just a few of the metrics contributing to ATGE's Value grade of B and STRA's Value grade of C.
ATGE sticks out from STRA in both our Zacks Rank and Style Scores models, so value investors will likely feel that ATGE is the better option right now.
Click to get this free report
Adtalem Global Education Inc. (ATGE): Free Stock Analysis Report
Strategic Education Inc. (STRA): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.