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AFYA vs. LOPE: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Schools sector might want to consider either Afya (AFYA - Free Report) or Grand Canyon Education (LOPE - Free Report) . 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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Afya is sporting a Zacks Rank of #2 (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 AFYA has an improving earnings outlook. However, value investors will care about much more than just this.

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 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.

AFYA currently has a forward P/E ratio of 11.64, while LOPE has a forward P/E of 17.28. We also note that AFYA has a PEG ratio of 0.57. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LOPE currently has a PEG ratio of 1.15.

Another notable valuation metric for AFYA is its P/B ratio of 2.30. 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, LOPE has a P/B of 5.53.

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

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


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Grand Canyon Education, Inc. (LOPE) - free report >>

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