Investors interested in Transportation - Equipment and Leasing stocks are likely familiar with Greenbrier Companies (GBX) and Westinghouse Air Brake Technologies (WAB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Greenbrier Companies and Westinghouse Air Brake Technologies are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
GBX currently has a forward P/E ratio of 7.71, while WAB has a forward P/E of 24.06. We also note that GBX has a PEG ratio of 1.42. 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. WAB currently has a PEG ratio of 1.50.
Another notable valuation metric for GBX is its P/B ratio of 0.94. 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, WAB has a P/B of 3.46.
These are just a few of the metrics contributing to GBX's Value grade of A and WAB's Value grade of D.
Both GBX and WAB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GBX is the superior value option right now.
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Greenbrier Companies, Inc. (The) (GBX): Free Stock Analysis Report Wabtec (WAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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