Investors interested in stocks from the Schools sector have probably already heard of Adtalem Global Education (ATGE) and Lincoln Educational Services Corporation (LINC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Adtalem Global Education and Lincoln Educational Services Corporation are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ATGE 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
ATGE currently has a forward P/E ratio of 12.82, while LINC has a forward P/E of 29.07. We also note that ATGE has a PEG ratio of 0.85. 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 1.94.
Another notable valuation metric for ATGE is its P/B ratio of 2.51. 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 4.06.
Based on these metrics and many more, ATGE holds a Value grade of A, while LINC has a Value grade of C.
ATGE sticks out from LINC in both our Zacks Rank and Style Scores models, so value investors will likely feel that ATGE is the better option right now.
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Adtalem Global Education Inc. (ATGE): 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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