Investors with an interest in Schools stocks have likely encountered both Perdoceo Education (PRDO) and Universal Technical Institute (UTI). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Perdoceo Education has a Zacks Rank of #2 (Buy), while Universal Technical Institute has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that PRDO likely has seen a stronger improvement to its earnings outlook than UTI has recently. But this is just one piece of the puzzle for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PRDO currently has a forward P/E ratio of 10.78, while UTI has a forward P/E of 51.84. We also note that PRDO has a PEG ratio of 0.72. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. UTI currently has a PEG ratio of 3.46.
Another notable valuation metric for PRDO is its P/B ratio of 2.1. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, UTI has a P/B of 6.38.
Based on these metrics and many more, PRDO holds a Value grade of A, while UTI has a Value grade of D.
PRDO has seen stronger estimate revision activity and sports more attractive valuation metrics than UTI, so it seems like value investors will conclude that PRDO is the superior option right now.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Perdoceo Education Corporation (PRDO): Free Stock Analysis Report
Universal Technical Institute Inc (UTI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).