Investors interested in Schools stocks are likely familiar with Perdoceo Education (PRDO) and Grand Canyon Education (LOPE). 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 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.
Currently, both Perdoceo Education and Grand Canyon Education are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
PRDO currently has a forward P/E ratio of 9.32, while LOPE has a forward P/E of 17.31. We also note that PRDO has a PEG ratio of 0.62. 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 1.15.
Another notable valuation metric for PRDO is its P/B ratio of 1.56. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LOPE has a P/B of 5.29.
These are just a few of the metrics contributing to PRDO's Value grade of A and LOPE's Value grade of C.
Both PRDO and LOPE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PRDO is the superior value option right now.
Top 5 Dividend Stocks for Your Retirement
Zacks targets 5 well-established companies with solid fundamentals and a history of raising dividends. More importantly, they have the resources and will to likely pay them in the future.
Click now for a Special Report packed with unconventional wisdom and insights you simply won’t get from your neighborhood financial planner.
See our Top 5 now – the report is FREE >>Perdoceo Education Corporation (PRDO) : Free Stock Analysis Report
Grand Canyon Education, Inc. (LOPE) : 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.
