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

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Zacks Equity Research
·2 min read
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Investors interested in Schools stocks are likely familiar with Adtalem Global Education (ATGE) and TAL Education (TAL). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.

Currently, Adtalem Global Education has a Zacks Rank of #2 (Buy), while TAL Education has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ATGE is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 13.75, while TAL has a forward P/E of 73.24. We also note that ATGE has a PEG ratio of 0.92. 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. TAL currently has a PEG ratio of 2.21.

Another notable valuation metric for ATGE is its P/B ratio of 1.56. 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, TAL has a P/B of 8.92.

These are just a few of the metrics contributing to ATGE's Value grade of B and TAL's Value grade of D.

ATGE sticks out from TAL in both our Zacks Rank and Style Scores models, so value investors will likely feel that ATGE is the better option right now.


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