Investors with an interest in Schools stocks have likely encountered both American Public Education (APEI) and Lincoln Educational Services Corporation (LINC). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
American Public Education has a Zacks Rank of #1 (Strong Buy), while Lincoln Educational Services Corporation has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that APEI has an improving earnings outlook. But this is only part of the picture for value investors.
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.
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.
APEI currently has a forward P/E ratio of 18.75, while LINC has a forward P/E of 31.74. We also note that APEI has a PEG ratio of 1.25. 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. LINC currently has a PEG ratio of 2.12.
Another notable valuation metric for APEI is its P/B ratio of 2.7. 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, LINC has a P/B of 4.54.
These metrics, and several others, help APEI earn a Value grade of B, while LINC has been given a Value grade of D.
APEI sticks out from LINC in both our Zacks Rank and Style Scores models, so value investors will likely feel that APEI is the better option right now.
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American Public Education, Inc. (APEI): 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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