Investors with an interest in Schools stocks have likely encountered both Vasta Platform Limited (VSTA) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Vasta Platform Limited has a Zacks Rank of #2 (Buy), while Lincoln Educational Services Corporation has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VSTA is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
VSTA currently has a forward P/E ratio of 14.94, while LINC has a forward P/E of 29.80. We also note that VSTA has a PEG ratio of 0.26. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LINC currently has a PEG ratio of 1.99.
Another notable valuation metric for VSTA is its P/B ratio of 0.45. 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 3.93.
Based on these metrics and many more, VSTA holds a Value grade of A, while LINC has a Value grade of C.
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 Lincoln Educational Services Corporation (LINC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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