Investors with an interest in Transportation - Shipping stocks have likely encountered both Seaspan (SSW) and Martin Midstream Partners L.P. (MMLP). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Seaspan is sporting a Zacks Rank of #2 (Buy), while Martin Midstream Partners L.P. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SSW is likely seeing its earnings outlook improve to a greater extent. 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.
SSW currently has a forward P/E ratio of 9.84, while MMLP has a forward P/E of 87.39. We also note that SSW has a PEG ratio of 0.63. 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. MMLP currently has a PEG ratio of 43.69.
Another notable valuation metric for SSW is its P/B ratio of 0.48. 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, MMLP has a P/B of 1.56.
Based on these metrics and many more, SSW holds a Value grade of A, while MMLP has a Value grade of C.
SSW sticks out from MMLP in both our Zacks Rank and Style Scores models, so value investors will likely feel that SSW is the better option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.