Investors interested in Transportation - Equipment and Leasing stocks are likely familiar with Air Lease (AL) 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 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.
Both Air Lease and Westinghouse Air Brake Technologies have a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AL currently has a forward P/E ratio of 8.85, while WAB has a forward P/E of 24.41. We also note that AL has a PEG ratio of 0.51. 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 1.92.
Another notable valuation metric for AL is its P/B ratio of 0.85. 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, WAB has a P/B of 3.84.
These metrics, and several others, help AL earn a Value grade of A, while WAB has been given a Value grade of D.
Both AL and WAB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AL is the superior value option right now.
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Air Lease Corporation (AL): Free Stock Analysis Report Wabtec (WAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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