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 offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Air Lease and Westinghouse Air Brake Technologies are holding a Zacks Rank of #2 (Buy). 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 10.45, while WAB has a forward P/E of 23.81. We also note that AL has a PEG ratio of 0.60. 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. WAB currently has a PEG ratio of 1.54.
Another notable valuation metric for AL is its P/B ratio of 0.83. 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, WAB has a P/B of 3.41.
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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