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CECO vs. LOPE: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Schools sector have probably already heard of Career Education (CECO) and Grand Canyon Education (LOPE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Career Education has a Zacks Rank of #1 (Strong Buy), while Grand Canyon Education has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CECO has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

CECO currently has a forward P/E ratio of 11.86, while LOPE has a forward P/E of 17.17. We also note that CECO has a PEG ratio of 0.79. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LOPE currently has a PEG ratio of 1.14.

Another notable valuation metric for CECO is its P/B ratio of 2.73. 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 3.36.

These metrics, and several others, help CECO earn a Value grade of B, while LOPE has been given a Value grade of C.

CECO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CECO is likely the superior value option right now.


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Career Education Corporation (CECO) : Free Stock Analysis Report
 
Grand Canyon Education, Inc. (LOPE) : Free Stock Analysis Report
 
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