Investors interested in stocks from the Schools sector have probably already heard of Perdoceo Education (PRDO) and Grand Canyon Education (LOPE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Perdoceo Education is sporting a Zacks Rank of #1 (Strong Buy), while Grand Canyon Education has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PRDO likely has seen a stronger improvement to its earnings outlook than LOPE has recently. 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.
PRDO currently has a forward P/E ratio of 10.94, while LOPE has a forward P/E of 15.53. We also note that PRDO has a PEG ratio of 0.73. 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. LOPE currently has a PEG ratio of 1.04.
Another notable valuation metric for PRDO is its P/B ratio of 2.21. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LOPE has a P/B of 5.88.
Based on these metrics and many more, PRDO holds a Value grade of A, while LOPE has a Value grade of C.
PRDO sticks out from LOPE in both our Zacks Rank and Style Scores models, so value investors will likely feel that PRDO is the better option right now.
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Perdoceo Education Corporation (PRDO): 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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