Should Value Investors Buy American Public Education (APEI) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is American Public Education (APEI). APEI is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A.

Another valuation metric that we should highlight is APEI's P/B ratio of 1.97. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.32. APEI's P/B has been as high as 2.12 and as low as 0.87, with a median of 1.47, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. APEI has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.43.

Investors could also keep in mind Perdoceo Education (PRDO), another Schools stock with a Zacks Rank of #2 (Buy) and Value grade of A.

Shares of Perdoceo Education are currently trading at a forward earnings multiple of 11.12 and a PEG ratio of 0.74 compared to its industry's P/E and PEG ratios of 14.50 and 0.64, respectively.

Over the past year, PRDO's P/E has been as high as 13.31, as low as 8.92, with a median of 11.04; its PEG ratio has been as high as 0.89, as low as 0.59, with a median of 0.74 during the same time period.

Additionally, Perdoceo Education has a P/B ratio of 1.94 while its industry's price-to-book ratio sits at 3.32. For PRDO, this valuation metric has been as high as 2.30, as low as 1.45, with a median of 1.81 over the past year.

These are only a few of the key metrics included in American Public Education and Perdoceo Education strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, APEI and PRDO look like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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