Investors interested in Schools stocks are likely familiar with Perdoceo Education (PRDO) 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.
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 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.
Right now, Perdoceo Education is sporting a Zacks Rank of #2 (Buy), while Lincoln Educational Services Corporation has a Zacks Rank of #4 (Sell). This means that PRDO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
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.
PRDO currently has a forward P/E ratio of 12.39, while LINC has a forward P/E of 28.87. We also note that PRDO has a PEG ratio of 0.83. 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 1.92.
Another notable valuation metric for PRDO is its P/B ratio of 2.08. 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, LINC has a P/B of 3.22.
These are just a few of the metrics contributing to PRDO's Value grade of A and LINC's Value grade of C.
PRDO 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 PRDO is likely the superior value option right now.
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Perdoceo Education Corporation (PRDO): 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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