BAESY or CW: Which Is the Better Value Stock Right Now?

Investors interested in Aerospace - Defense Equipment stocks are likely familiar with Bae Systems PLC (BAESY) and Curtiss-Wright (CW). 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.

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 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.

Bae Systems PLC has a Zacks Rank of #2 (Buy), while Curtiss-Wright has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BAESY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

BAESY currently has a forward P/E ratio of 23.86, while CW has a forward P/E of 29.79. We also note that BAESY has a PEG ratio of 2. 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. CW currently has a PEG ratio of 2.74.

Another notable valuation metric for BAESY is its P/B ratio of 4.63. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CW has a P/B of 5.61.

Based on these metrics and many more, BAESY holds a Value grade of B, while CW has a Value grade of C.

BAESY sticks out from CW in both our Zacks Rank and Style Scores models, so value investors will likely feel that BAESY is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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