Investors interested in Transportation - Services stocks are likely familiar with ZTO Express (Cayman) Inc. (ZTO) and TFI International Inc. (TFII). But which of these two stocks presents investors with the better value opportunity right now? 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.
ZTO Express (Cayman) Inc. and TFI International Inc. are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that ZTO'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 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 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.
ZTO currently has a forward P/E ratio of 12.18, while TFII has a forward P/E of 20.28. We also note that ZTO has a PEG ratio of 3.93. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TFII currently has a PEG ratio of 4.86.
Another notable valuation metric for ZTO is its P/B ratio of 1.25. 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, TFII has a P/B of 2.68.
These metrics, and several others, help ZTO earn a Value grade of B, while TFII has been given a Value grade of D.
ZTO stands above TFII thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ZTO is the superior value option right now.
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ZTO Express (Cayman) Inc. (ZTO): Free Stock Analysis Report TFI International Inc. (TFII): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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