STRA or LAUR: Which Is the Better Value Stock Right Now?
Investors with an interest in Schools stocks have likely encountered both Strategic Education (STRA) and Laureate Education (LAUR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Strategic Education has a Zacks Rank of #2 (Buy), while Laureate Education has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that STRA is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
STRA currently has a forward P/E ratio of 10.50, while LAUR has a forward P/E of 17.79. We also note that STRA has a PEG ratio of 0.70. 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. LAUR currently has a PEG ratio of 1.19.
Another notable valuation metric for STRA is its P/B ratio of 1.03. 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, LAUR has a P/B of 4.54.
Based on these metrics and many more, STRA holds a Value grade of A, while LAUR has a Value grade of C.
STRA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that STRA is likely the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
