STRA vs. LINC: Which Stock Is the Better Value Option?

Investors interested in Schools stocks are likely familiar with Strategic Education (STRA) 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.

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 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, Strategic Education is sporting a Zacks Rank of #2 (Buy), while Lincoln Educational Services Corporation has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that STRA has an improving earnings outlook. 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.

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.

STRA currently has a forward P/E ratio of 10.64, while LINC has a forward P/E of 63.70. We also note that STRA has a PEG ratio of 0.71. 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. LINC currently has a PEG ratio of 4.25.

Another notable valuation metric for STRA is its P/B ratio of 1.06. 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 7.95.

These metrics, and several others, help STRA earn a Value grade of A, while LINC has been given a Value grade of D.

STRA has seen stronger estimate revision activity and sports more attractive valuation metrics than LINC, so it seems like value investors will conclude that STRA is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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