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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Strategic Education and Lincoln Educational Services Corporation are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that STRA likely has seen a stronger improvement to its earnings outlook than LINC has recently. But this is only part of the picture for value investors.
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 10.32, while LINC has a forward P/E of 55.08. We also note that STRA has a PEG ratio of 0.69. 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. LINC currently has a PEG ratio of 3.67.
Another notable valuation metric for STRA is its P/B ratio of 1.02. 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 6.19.
These metrics, and several others, help STRA earn a Value grade of A, while LINC has been given a Value grade of D.
STRA sticks out from LINC in both our Zacks Rank and Style Scores models, so value investors will likely feel that STRA is the better option right now.
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Strategic Education Inc. (STRA): Free Stock Analysis Report
Lincoln Educational Services Corporation (LINC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).