AFYA or BFAM: Which Is the Better Value Stock Right Now?
Investors interested in Schools stocks are likely familiar with Afya (AFYA) and Bright Horizons Family Solutions (BFAM). But which of these two stocks presents investors with the better value opportunity right now? 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.
Afya and Bright Horizons Family Solutions are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AFYA likely has seen a stronger improvement to its earnings outlook than BFAM 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.
AFYA currently has a forward P/E ratio of 11.77, while BFAM has a forward P/E of 34.85. We also note that AFYA has a PEG ratio of 0.60. 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. BFAM currently has a PEG ratio of 2.04.
Another notable valuation metric for AFYA is its P/B ratio of 2.18. 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, BFAM has a P/B of 4.75.
Based on these metrics and many more, AFYA holds a Value grade of B, while BFAM has a Value grade of C.
AFYA sticks out from BFAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that AFYA is the better option right 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
Afya Limited (AFYA) : Free Stock Analysis Report
Bright Horizons Family Solutions Inc. (BFAM) : Free Stock Analysis Report
