Investors looking for stocks in the Schools sector might want to consider either Perdoceo Education (PRDO) or Universal Technical Institute (UTI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Perdoceo Education has a Zacks Rank of #2 (Buy), while Universal Technical Institute has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that PRDO likely has seen a stronger improvement to its earnings outlook than UTI 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PRDO currently has a forward P/E ratio of 13.29, while UTI has a forward P/E of 25.95. We also note that PRDO has a PEG ratio of 0.89. 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. UTI currently has a PEG ratio of 1.73.
Another notable valuation metric for PRDO is its P/B ratio of 2.21. 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, UTI has a P/B of 4.88.
Based on these metrics and many more, PRDO holds a Value grade of A, while UTI has a Value grade of C.
PRDO has seen stronger estimate revision activity and sports more attractive valuation metrics than UTI, so it seems like value investors will conclude that PRDO is the superior option right now.
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Perdoceo Education Corporation (PRDO): Free Stock Analysis Report Universal Technical Institute Inc (UTI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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