VZ vs. SPCX: Which Stock Is the Better Value Option?
Investors interested in Wireless National stocks are likely familiar with Verizon Communications (VZ) and SpaceX (SPCX). 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 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, Verizon Communications has a Zacks Rank of #2 (Buy), while SpaceX 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 VZ is likely seeing its earnings outlook improve to a greater extent. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
VZ currently has a forward P/E ratio of 9.14, while SPCX has a forward P/E of 7,403.50. We also note that VZ has a PEG ratio of 1.56. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SPCX currently has a PEG ratio of 370.17.
Another notable valuation metric for VZ is its P/B ratio of 1.82. 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, SPCX has a P/B of 15.34.
These metrics, and several others, help VZ earn a Value grade of A, while SPCX has been given a Value grade of F.
VZ stands above SPCX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VZ is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
