Investors interested in Schools stocks are likely familiar with American Public Education (APEI) and Lincoln Educational Services Corporation (LINC). 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.
American Public Education has a Zacks Rank of #1 (Strong Buy), while Lincoln Educational Services Corporation has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that APEI likely has seen a stronger improvement to its earnings outlook than LINC has recently. 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.
APEI currently has a forward P/E ratio of 20.35, while LINC has a forward P/E of 31.26. We also note that APEI has a PEG ratio of 1.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LINC currently has a PEG ratio of 2.08.
Another notable valuation metric for APEI is its P/B ratio of 1.93. 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, LINC has a P/B of 4.
Based on these metrics and many more, APEI holds a Value grade of A, while LINC has a Value grade of C.
APEI sticks out from LINC in both our Zacks Rank and Style Scores models, so value investors will likely feel that APEI is the better option right now.
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American Public Education, Inc. (APEI): Free Stock Analysis Report Lincoln Educational Services Corporation (LINC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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