Investors with an interest in Schools stocks have likely encountered both Vasta Platform Limited (VSTA) and 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Vasta Platform Limited and Universal Technical Institute are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that VSTA likely has seen a stronger improvement to its earnings outlook than UTI has recently. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
VSTA currently has a forward P/E ratio of 14.91, while UTI has a forward P/E of 30.65. We also note that VSTA has a PEG ratio of 0.26. 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 2.04.
Another notable valuation metric for VSTA is its P/B ratio of 0.45. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, UTI has a P/B of 5.3.
These metrics, and several others, help VSTA earn a Value grade of A, while UTI has been given a Value grade of D.
VSTA 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 VSTA is likely the superior value option right now.
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Vasta Platform Limited (VSTA): 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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