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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Air Lease and Westinghouse Air Brake Technologies are both sporting 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 just one piece of the puzzle 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AL currently has a forward P/E ratio of 10.38, while WAB has a forward P/E of 23.30. We also note that AL has a PEG ratio of 0.60. 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 AL is its P/B ratio of 0.83. 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 3.34.
Based on these metrics and many more, AL holds a Value grade of A, while WAB has 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Air Lease Corporation (AL): Free Stock Analysis Report Wabtec (WAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
