Investors with an interest in Schools stocks have likely encountered both Afya (AFYA) and K12 (LRN). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Afya is sporting a Zacks Rank of #1 (Strong Buy), while K12 has a Zacks Rank of #2 (Buy). This means that AFYA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
AFYA currently has a forward P/E ratio of 10.86, while LRN has a forward P/E of 20.74. We also note that AFYA has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LRN currently has a PEG ratio of 1.04.
Another notable valuation metric for AFYA is its P/B ratio of 2.16. 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, LRN has a P/B of 4.52.
These are just a few of the metrics contributing to AFYA's Value grade of A and LRN's Value grade of C.
AFYA stands above LRN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AFYA is the superior value option right now.
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Afya Limited (AFYA): Free Stock Analysis Report Stride, Inc. (LRN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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