Investors interested in stocks from the Schools sector have probably already heard of Perdoceo Education (PRDO) and K12 (LRN). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Perdoceo Education has a Zacks Rank of #2 (Buy), while K12 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 PRDO is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
PRDO currently has a forward P/E ratio of 11.79, while LRN has a forward P/E of 16.66. We also note that PRDO has a PEG ratio of 0.79. 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. LRN currently has a PEG ratio of 0.83.
Another notable valuation metric for PRDO is its P/B ratio of 1.98. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LRN has a P/B of 3.97.
Based on these metrics and many more, PRDO holds a Value grade of A, while LRN has a Value grade of C.
PRDO stands above LRN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PRDO is the superior value option right now.
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Perdoceo Education Corporation (PRDO): Free Stock Analysis Report Stride, Inc. (LRN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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