Lincoln Educational Services (NASDAQ:LINC) and Bright Scholar Education Holdngs (NYSE:BEDU) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, profitability, risk and valuation.

Risk & Volatility

Lincoln Educational Services has a beta of 2.28, meaning that its share price is 128% more volatile than the S&P 500. Comparatively, Bright Scholar Education Holdngs has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Profitability

This table compares Lincoln Educational Services and Bright Scholar Education Holdngs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lincoln Educational Services -1.85% -12.10% -3.77%
Bright Scholar Education Holdngs 14.37% 12.61% 7.75%

Insider and Institutional Ownership

62.9% of Lincoln Educational Services shares are held by institutional investors. Comparatively, 13.2% of Bright Scholar Education Holdngs shares are held by institutional investors. 6.2% of Lincoln Educational Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Lincoln Educational Services and Bright Scholar Education Holdngs, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lincoln Educational Services 0 0 1 0 3.00
Bright Scholar Education Holdngs 0 1 2 0 2.67

Lincoln Educational Services presently has a consensus target price of $3.50, indicating a potential upside of 70.73%. Bright Scholar Education Holdngs has a consensus target price of $17.00, indicating a potential upside of 59.18%. Given Lincoln Educational Services’ stronger consensus rating and higher possible upside, research analysts clearly believe Lincoln Educational Services is more favorable than Bright Scholar Education Holdngs.

Valuation & Earnings

This table compares Lincoln Educational Services and Bright Scholar Education Holdngs’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lincoln Educational Services $261.85 million 0.19 -$11.48 million ($0.48) -4.27
Bright Scholar Education Holdngs $201.61 million 6.74 $26.11 million $0.25 42.72

Bright Scholar Education Holdngs has lower revenue, but higher earnings than Lincoln Educational Services. Lincoln Educational Services is trading at a lower price-to-earnings ratio than Bright Scholar Education Holdngs, indicating that it is currently the more affordable of the two stocks.

Summary

Bright Scholar Education Holdngs beats Lincoln Educational Services on 8 of the 14 factors compared between the two stocks.

Lincoln Educational Services Company Profile

Lincoln Educational Services Corporation, together with its subsidiaries, provides various career-oriented post-secondary education services to high school graduates and working adults in the United States. The company operates in three segments: Transportation and Skilled Trades; Healthcare and Other Professions; and Transitional. It offers bachelor's degree, associate's degree, and diploma and certificate programs in automotive technology, skilled trades, healthcare services, hospitality services, and business and information technology areas. The company operates 23 schools in 14 states under the Lincoln Technical Institute, Lincoln College of Technology, Lincoln College of New England, Lincoln Culinary Institute, Euphoria Institute of Beauty Arts and Sciences, and associated brand names. Lincoln Educational Services Corporation was founded in 1946 and is based in West Orange, New Jersey.

Bright Scholar Education Holdngs Company Profile

Bright Scholar Education Holdings Limited operates K-12 schools in China. Its schools comprise international schools, bilingual schools, and kindergartens. The company also offers a range of complementary education services, including international camps and after-school programs. As of May 31, 2018, it had a network of 67 schools with approximately 35,275 students. The company was founded in 1994 and is based in Foshan, China.

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