ATGE vs. BFAM: Which Stock Is the Better Value Option?
Investors interested in Schools stocks are likely familiar with Adtalem Global Education (ATGE) and Bright Horizons Family Solutions (BFAM). 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 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.
Both Adtalem Global Education and Bright Horizons Family Solutions have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
ATGE currently has a forward P/E ratio of 17.54, while BFAM has a forward P/E of 34.96. We also note that ATGE has a PEG ratio of 1.32. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BFAM currently has a PEG ratio of 2.91.
Another notable valuation metric for ATGE is its P/B ratio of 2.04. 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, BFAM has a P/B of 8.20.
Based on these metrics and many more, ATGE holds a Value grade of B, while BFAM has a Value grade of D.
Both ATGE and BFAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATGE is the superior value 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
Adtalem Global Education Inc. (ATGE) : Free Stock Analysis Report
Bright Horizons Family Solutions Inc. (BFAM) : Free Stock Analysis Report
To read this article on Zacks.com click here.
