At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In" we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and worst and sorriest, too.

And speaking of the best ...
All across the land, the year's first snowflakes make students think of Christmas break and a pause in their ceaseless studies. But on Wall Street, it's the first day of school for megabanker Banc of America Securities -- or, rather, the first day for covering school stocks.

On Wednesday, B of A initiated coverage on a whole raft of for-profit education companies:

  • Apollo Group (NASDAQ:APOL)
  • Bright Horizons (NASDAQ:BFAM)
  • Capella Education (NASDAQ:CPLA)
  • Career Education (NASDAQ:CECO)
  • Corinthian Colleges (NASDAQ:COCO)
  • DeVry (NYSE:DV)
  • ITT Educational (NYSE:ESI)
  • Lincoln Educational
  • Strayer Education
  • Universal Technical Institute

But as far as actual opinions go, B of A went out on a limb for only three: Apollo, Corinthian, and ITT -- each of which got a gold star and a "buy" rating. To everyone else, B of A gave a mark of "Nice try!" (with a smiley face) and rated them as "neutral."

Now, no major media outlet has wrung out an explanation from B of A on why it likes what it likes in this sector. When I look at the sector, I don't see a whole lot to like these days -- at least not at these prices:

Trailing P/E

Projected
Growth
Rate

PEG*

P / FCF

Corinthian Colleges

195 (!)

24.1%

8.1

NM

Career Education

38.5

11.4%

3.4

18

Lincoln Educational

43.6

16.4%

2.7

600 (!)

Strayer Education

43.0

18.2%

2.4

48

Capella Education

60.8

26.6%

2.3

63

Universal Technical Institute

30.8

13.4%

2.3

NM

Apollo Group

32.8

14.1%

2.3

27

DeVry

47.6

21.7%

2.2

37

ITT Educational

32.2

19.2%

1.7

32

Bright Horizons

22.1

18.8%

1.2

34

Source: Capital IQ, a division of Standard & Poor's.
*Calculated using trailing price-to-earnings ratio.
NM = not meaningful.
(!) = Yowza!

How Banc of America can look at these numbers and pick three winners out of them is beyond me. Of the stocks it likes, Corinthian's hard to judge -- that high P/E and negative free cash flow really throw things off. And Apollo's merely overpriced. Really, only ITT interests me in the slightest -- but with its PEG of 1.7, you won't find me buying even that stock any time soon.

Foolish takeaway
Here's the way I see things. Overall, the stock market is trading for 18.5 times trailing earnings, and analysts expect the average S&P 500 company to grow those earnings at 12.6% per year going forward. Divide 18.5 by 12.6, and the entire market, taken as a whole, carries a PEG ratio of 1.5.

That's possibly pricey -- but not nearly as expensive as the education and training services industry. Here, you're looking at an average P/E of 41.1, and an average growth rate of 13.7%. So in PEG terms, this group is twice as expensive as the broader market. That tells me the industry is overvalued as a whole, and it basically leaves me uninterested in for-profit education stocks in general.

Disagree? Feel free. Come on over to CAPS, and tell me why.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's ranked No. 979 out of more than 40,000 rated players. The Fool has a disclosure policy.