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Stride, Inc. (LRN) - free report >>
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Stride, Inc. (LRN) - free report >>
Bright Horizons Family Solutions Inc. (BFAM) - free report >>
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LRN vs. BFAM: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Schools sector have probably already heard of K12 (LRN - Free Report) and Bright Horizons Family Solutions (BFAM - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
K12 and Bright Horizons Family Solutions are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LRN is likely seeing its earnings outlook improve to a greater extent. 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 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.
LRN currently has a forward P/E ratio of 18.72, while BFAM has a forward P/E of 179.64. We also note that LRN has a PEG ratio of 0.94. 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. BFAM currently has a PEG ratio of 32.66.
Another notable valuation metric for LRN is its P/B ratio of 1.45. 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 8.11.
These metrics, and several others, help LRN earn a Value grade of B, while BFAM has been given a Value grade of F.
LRN sticks out from BFAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that LRN is the better option right now.