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ATGE vs. BFAM: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Aon (AON) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors interested in stocks from the Schools sector have probably already heard of Adtalem Global Education (ATGE) and Bright Horizons Family Solutions (BFAM). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.

Adtalem Global Education and Bright Horizons Family Solutions are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ATGE has an improving earnings outlook. But this is just one piece of the puzzle 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.

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 17.18, while BFAM has a forward P/E of 33.89. We also note that ATGE has a PEG ratio of 1.30. 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 3.21.

Another notable valuation metric for ATGE is its P/B ratio of 2.01. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BFAM has a P/B of 9.06.

These metrics, and several others, help ATGE earn a Value grade of B, while BFAM has been given a Value grade of D.

ATGE stands above BFAM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ATGE is the superior value option right now.


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Adtalem Global Education Inc. (ATGE) : Free Stock Analysis Report
 
Bright Horizons Family Solutions Inc. (BFAM) : Free Stock Analysis Report
 
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