WAIR or LMT: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Aerospace - Defense sector have probably already heard of Wesco Aircraft Holdings (WAIR) and Lockheed Martin (LMT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Wesco Aircraft Holdings has a Zacks Rank of #2 (Buy), while Lockheed Martin has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that WAIR likely has seen a stronger improvement to its earnings outlook than LMT has recently. However, value investors will care about much more than just this.
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.
WAIR currently has a forward P/E ratio of 12.83, while LMT has a forward P/E of 18.23. We also note that WAIR has a PEG ratio of 1.07. 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. LMT currently has a PEG ratio of 2.57.
Another notable valuation metric for WAIR is its P/B ratio of 1.50. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LMT has a P/B of 37.69.
Based on these metrics and many more, WAIR holds a Value grade of B, while LMT has a Value grade of C.
WAIR 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 WAIR is likely the superior value option right now.
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Lockheed Martin Corporation (LMT): 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.