Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the School, College & University industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued School, College & University Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

3 Undervalued School, College & University Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the School, College & University industry for Thursday, February 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the School, College & University industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Graham Holdings Co’s Value Grade

Value Grade:

Graham Holdings Company is a diversified holding company. The Company?s segments include Kaplan International, Kaplan Higher Education, Kaplan Supplemental Education, Television Broadcasting, Manufacturing, Healthcare and Automotive. Kaplan International includes postsecondary education, professional training and language training businesses outside the United States. Higher Education includes Kaplan as a service provider to higher education institutions. Supplemental Education includes Kaplan?s test preparation programs and domestic professional and other continuing education businesses. Television Broadcasting includes seven television stations located in Houston, Texas (TX); Detroit, Michigan (MI); Orlando, Florida (FL); San Antonio, TX; Roanoke, Virginia (VA); and two stations in Jacksonville, FL. Its operations include education, television broadcasting online, podcast, print and local TV news; manufacturing; home health and hospice care, and automotive dealerships.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Graham Holdings Co has a Value Score of 67, which is considered to be undervalued.

When you look at Graham Holdings Co’s price-to-sales ratio at 0.77 compared to the industry median at 0.99, this company has a lower price relative to revenue compared to its peers. This could make Graham Holdings Co’s stock more attractive for value investors.

Graham Holdings Co’s price-earnings ratio is 21.45 compared to the industry median at 18.47. This means it has a higher share price relative to earnings compared to its peers. This could make Graham Holdings Co less attractive for value investors.

Now, let’s assess Graham Holdings Co’s EV/EBITDA ratio, also known as enterprise multiple. At 7.8, when compared to the industry median of 5.6, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Graham Holdings Co’s shareholder yield is higher than its industry median ratio of 0.00%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Graham Holdings Co’s price-to-book ratio is higher than its industry median ratio of 0.34. This could make Graham Holdings Co less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Graham Holdings Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Graham Holdings Co’s price-to-free-cash-flow ratio is higher than its industry median ratio of 14.86. This could make Graham Holdings Co less attractive because the higher P/FCF ratio indicates that Graham Holdings Co is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Lixiang Education Holding Co Ltd - ADR’s Value Grade

Value Grade:

Lixiang Education Holding Co Ltd is a holding company mainly provides private primary and secondary education service. The Company is designated as the Foreign Language Experimental School of the National Basic Foreign Language Teaching Research Center. It is also the base of arts, sports, Chinese calligraphy and small-class education. It not only offers standard the People's Republic of China (PRC) curriculum programs, but also places an emphasis on featured curriculum programs. It also offer high school education services at its High School Division through its collaboration. It is mainly responsible for student admission and progression. The Company conducts its businesses in the China market.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Lixiang Education Holding Co Ltd - ADR has a Value Score of 64, which is considered to be undervalued.

Lixiang Education Holding Co Ltd - ADR’s price-to-book ratio is lower than its peers. This could make Lixiang Education Holding Co Ltd - ADR more attractive for value investors when compared to the industry median at 0.34.

You can read more about Lixiang Education Holding Co Ltd - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Vitru Ltd’s Value Grade

Value Grade:

Vitru Ltd is a Brazil-based company that operates in the Higher Education segment by offering digital education undergraduate programs as well as on-campus undergraduate programs, graduate courses, technical and professional qualification courses. The Company’s mission is to democratize access to education in Brazil through a digital ecosystem. Vitru Ltd offers more than 330 courses through the Virtual Learning Environment (VLE), which is delivered in multiple formats (videos, eBooks, podcasts, and html texts, among others), offering accessible digital contents to different learning styles. The Company’s portfolio comprises Technical Courses, Professional Qualification Courses, Digital Education Undergraduate Courses (Bachelor’s, Licentiate’s, and Vocational degrees), OnCampus Undergraduate Courses (Bachelor’s, Licentiate’s, and Vocational degrees) as well as DE Graduate programs. Vitru Ltd has several subsidiaries such as FAC Educacional Ltda and FAIR Educacional Ltda.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Vitru Ltd has a Value Score of 61, which is considered to be undervalued.

Vitru Ltd’s price-earnings ratio is 15.5 compared to the industry median at 18.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Vitru Ltd more attractive for value investors.

Vitru Ltd’s price-to-book ratio is lower than its peers. This could make Vitru Ltd more attractive for value investors when compared to the industry median at 0.34.

You can read more about Vitru Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other School, College & University Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about School, College & University stocks as well as other industrys.

Choosing Which of the 3 Best School, College & University Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Graham Holdings Co stock has a Value Grade of B.
• Lixiang Education Holding Co Ltd - ADR stock has a Value Grade of B.
• Vitru Ltd stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the School, College & University industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About School, College & University Stocks

Want to learn more about School, College & University stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued School, College & University Stocks for Thursday, February 15
• 3 Undervalued School, College & University Stocks for Friday, February 02
• 3 Undervalued School, College & University Stocks for Monday, January 29
• 3 Undervalued School, College & University Stocks for Wednesday, January 24

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.