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

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Investors interested in stocks from the Schools sector have probably already heard of Lincoln Educational Services Corporation (LINC - Free Report) and Grand Canyon Education (LOPE - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Currently, Lincoln Educational Services Corporation has a Zacks Rank of #1 (Strong Buy), while Grand Canyon Education has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LINC is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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 12.44, while LOPE has a forward P/E of 14.97. We also note that LINC has a PEG ratio of 0.92. 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. LOPE currently has a PEG ratio of 1.

Another notable valuation metric for LINC is its P/B ratio of 2.04. 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 3.38.

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

LINC stands above LOPE 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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