Investors looking for stocks in the Transportation - Equipment and Leasing sector might want to consider either Air Lease (AL) or Westinghouse Air Brake Technologies (WAB). 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.
Currently, both Air Lease and Westinghouse Air Brake Technologies are holding a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AL currently has a forward P/E ratio of 10.25, while WAB has a forward P/E of 23.37. We also note that AL has a PEG ratio of 0.59. 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. WAB currently has a PEG ratio of 1.51.
Another notable valuation metric for AL is its P/B ratio of 0.82. 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, WAB has a P/B of 3.35.
Based on these metrics and many more, AL holds a Value grade of A, while WAB has a Value grade of D.
Both AL and WAB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AL is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
