Markets

SSW or KEX: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Transportation - Shipping sector might want to consider either Seaspan (SSW) or Kirby (KEX). 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.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Seaspan has a Zacks Rank of #2 (Buy), while Kirby has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SSW has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

SSW currently has a forward P/E ratio of 15.98, while KEX has a forward P/E of 27.77. We also note that SSW has a PEG ratio of 1.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KEX currently has a PEG ratio of 2.61.

Another notable valuation metric for SSW is its P/B ratio of 0.78. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, KEX has a P/B of 1.49.

Based on these metrics and many more, SSW holds a Value grade of A, while KEX has a Value grade of C.

SSW has seen stronger estimate revision activity and sports more attractive valuation metrics than KEX, so it seems like value investors will conclude that SSW is the superior option right now.


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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.

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