Investors interested in Schools stocks are likely familiar with K12 (LRN) and Universal Technical Institute (UTI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
K12 has a Zacks Rank of #1 (Strong Buy), while Universal Technical Institute has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that LRN likely has seen a stronger improvement to its earnings outlook than UTI has recently. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
LRN currently has a forward P/E ratio of 44.61, while UTI has a forward P/E of 48.59. We also note that LRN has a PEG ratio of 2.97. 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. UTI currently has a PEG ratio of 3.24.
Another notable valuation metric for LRN is its P/B ratio of 1.42. 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, UTI has a P/B of 2.94.
Based on these metrics and many more, LRN holds a Value grade of B, while UTI has a Value grade of D.
LRN has seen stronger estimate revision activity and sports more attractive valuation metrics than UTI, so it seems like value investors will conclude that LRN is the superior option right now.
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K12 Inc (LRN) : Free Stock Analysis Report
Universal Technical Institute Inc (UTI) : Free Stock Analysis Report
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