Investors interested in stocks from the Schools sector have probably already heard of K12 (LRN) and Grand Canyon Education (LOPE). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
K12 and Grand Canyon Education are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that LRN likely has seen a stronger improvement to its earnings outlook than LOPE has recently. But this is just one factor that value investors are interested in.
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.
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.
LRN currently has a forward P/E ratio of 8.10, while LOPE has a forward P/E of 16.99. We also note that LRN has a PEG ratio of 0.40. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LOPE currently has a PEG ratio of 1.13.
Another notable valuation metric for LRN is its P/B ratio of 1.94. 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, LOPE has a P/B of 6.36.
These metrics, and several others, help LRN earn a Value grade of A, while LOPE has been given a Value grade of D.
LRN sticks out from LOPE in both our Zacks Rank and Style Scores models, so value investors will likely feel that LRN is the better option right now.
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Stride, Inc. (LRN): Free Stock Analysis Report Grand Canyon Education, Inc. (LOPE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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