Investors with an interest in Transportation - Truck stocks have likely encountered both ArcBest (ARCB) and Landstar System (LSTR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
ArcBest and Landstar System are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that ARCB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ARCB currently has a forward P/E ratio of 14.97, while LSTR has a forward P/E of 19.21. We also note that ARCB has a PEG ratio of 0.37. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LSTR currently has a PEG ratio of 1.42.
Another notable valuation metric for ARCB is its P/B ratio of 1.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LSTR has a P/B of 7.24.
Based on these metrics and many more, ARCB holds a Value grade of A, while LSTR has a Value grade of C.
ARCB is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ARCB is likely the superior value option right now.
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ArcBest Corporation (ARCB): Free Stock Analysis Report
Landstar System, Inc. (LSTR): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
