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ATGE vs. UTI: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Schools sector have probably already heard of Adtalem Global Education (ATGE - Free Report) and Universal Technical Institute (UTI - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Adtalem Global Education has a Zacks Rank of #2 (Buy), while Universal Technical Institute has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ATGE likely has seen a stronger improvement to its earnings outlook than UTI has recently. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ATGE currently has a forward P/E ratio of 10.56, while UTI has a forward P/E of 59.56. We also note that ATGE has a PEG ratio of 0.70. 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 3.97.
Another notable valuation metric for ATGE is its P/B ratio of 1.36. 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 1.78.
Based on these metrics and many more, ATGE holds a Value grade of B, while UTI has a Value grade of C.
ATGE sticks out from UTI in both our Zacks Rank and Style Scores models, so value investors will likely feel that ATGE is the better option right now.