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

Investors interested in stocks from the Schools sector have probably already heard of Afya (AFYA) and Grand Canyon Education (LOPE). 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Afya and Grand Canyon Education are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. 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. But this is just one piece of the puzzle for value investors.

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.

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.

AFYA currently has a forward P/E ratio of 7.71, while LOPE has a forward P/E of 16.24. 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 1.08.

Another notable valuation metric for AFYA is its P/B ratio of 1.47. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LOPE has a P/B of 6.14.

These are just a few of the metrics contributing to AFYA's Value grade of A and LOPE's Value grade of C.

AFYA sticks out from LOPE in both our Zacks Rank and Style Scores models, so value investors will likely feel that AFYA is the better option right now.

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Afya Limited (AFYA): Free Stock Analysis Report

Grand Canyon Education, Inc. (LOPE): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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