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Investors interested in stocks from the Schools sector have probably already heard of Perdoceo Education (PRDO) and Grand Canyon Education (LOPE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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 Grand Canyon Education has a Zacks Rank of #3 (Hold) right now. This means that PRDO'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 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PRDO currently has a forward P/E ratio of 10.88, while LOPE has a forward P/E of 18.33. We also note that PRDO has a PEG ratio of 0.73. 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. LOPE currently has a PEG ratio of 1.22.
Another notable valuation metric for PRDO is its P/B ratio of 1.80. 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, LOPE has a P/B of 6.23.
These metrics, and several others, help PRDO earn a Value grade of A, while LOPE has been given a Value grade of C.
PRDO has seen stronger estimate revision activity and sports more attractive valuation metrics than LOPE, so it seems like value investors will conclude that PRDO is the superior option right now.
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Perdoceo Education Corporation (PRDO) : Free Stock Analysis Report
Grand Canyon Education, Inc. (LOPE) : Free Stock Analysis Report