Critical Review: ATA (NASDAQ:AACG) & Afya (NASDAQ:AFYA)

ATA (NASDAQ:AACG) and Afya (NASDAQ:AFYA) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, analyst recommendations, dividends, earnings and profitability.

Valuation & Earnings

This table compares ATA and Afya”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ATA	$38.34 million	0.69	-$6.87 million	($0.20)	-3.88
Afya	$662.01 million	1.46	$134.77 million	$1.64	6.29

Afya has higher revenue and earnings than ATA. ATA is trading at a lower price-to-earnings ratio than Afya, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

0.7% of ATA shares are held by institutional investors. Comparatively, 88.0% of Afya shares are held by institutional investors. 52.9% of ATA shares are held by insiders. Comparatively, 0.8% of Afya shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for ATA and Afya, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ATA	1	0	0	0	1.00
Afya	2	3	4	0	2.22

Afya has a consensus price target of $15.18, indicating a potential upside of 47.13%. Given Afya’s stronger consensus rating and higher possible upside, analysts plainly believe Afya is more favorable than ATA.

Volatility & Risk

ATA has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Afya has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500.

Profitability

This table compares ATA and Afya’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ATA	N/A	N/A	N/A
Afya	20.48%	17.43%	8.99%

Summary

Afya beats ATA on 12 of the 14 factors compared between the two stocks.

About ATA

ATA Creativity Global, formerly known as ATA Inc., is an education services company focused on helping students in China pursue international education opportunities. Its offerings include art and design instruction, portfolio preparation, test preparation, and study-abroad consulting. The company’s art education programs help students develop creative skills and prepare applications for overseas schools. ATA Creativity Global has also provided computer-based testing services in China, reflecting its earlier focus on assessment and examination services.

About Afya

Afya Limited is a Brazilian medical education and digital health company. Its education business offers undergraduate medical degree programs, medical residency preparation, postgraduate courses and continuing education for health professionals. The company also provides digital tools and services for medical students and practicing physicians, including clinical reference, practice-management and learning resources. These offerings support professionals at different stages of their medical careers.