Investors with an interest in Aerospace - Defense stocks have likely encountered both Airbus Group (EADSY) and Howmet (HWM). 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.
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.
Currently, Airbus Group has a Zacks Rank of #2 (Buy), while Howmet has a Zacks Rank of #3 (Hold). This means that EADSY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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.
EADSY currently has a forward P/E ratio of 26.64, while HWM has a forward P/E of 52.58. We also note that EADSY has a PEG ratio of 1.17. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HWM currently has a PEG ratio of 2.70.
Another notable valuation metric for EADSY is its P/B ratio of 6.65. 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, HWM has a P/B of 14.9.
These are just a few of the metrics contributing to EADSY's Value grade of B and HWM's Value grade of D.
EADSY 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 EADSY is likely the superior value option right now.
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Airbus Group (EADSY): Free Stock Analysis Report Howmet Aerospace Inc. (HWM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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