LINC vs. BFAM: Which Stock Is the Better Value Option?
Investors with an interest in Schools stocks have likely encountered both Lincoln Educational Services Corporation (LINC) 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Lincoln Educational Services Corporation has a Zacks Rank of #2 (Buy), while Bright Horizons Family Solutions has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LINC likely has seen a stronger improvement to its earnings outlook than BFAM has recently. 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.
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.
LINC currently has a forward P/E ratio of 24.71, while BFAM has a forward P/E of 35.26. We also note that LINC has a PEG ratio of 1.65. 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. BFAM currently has a PEG ratio of 2.07.
Another notable valuation metric for LINC is its P/B ratio of 1.75. 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 4.80.
Based on these metrics and many more, LINC holds a Value grade of B, while BFAM has a Value grade of D.
LINC stands above BFAM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LINC is the superior value option right now.
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Lincoln Educational Services Corporation (LINC) : Free Stock Analysis Report
Bright Horizons Family Solutions Inc. (BFAM) : Free Stock Analysis Report
