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HII vs. LMT: Which Stock Is the Better Value Option?

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Investors with an interest in Aerospace - Defense stocks have likely encountered both Huntington Ingalls (HII - Free Report) and Lockheed Martin (LMT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 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 Huntington Ingalls and Lockheed Martin 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.

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.

HII currently has a forward P/E ratio of 14.38, while LMT has a forward P/E of 19.79. We also note that HII has a PEG ratio of 0.96. 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. LMT currently has a PEG ratio of 2.70.

Another notable valuation metric for HII is its P/B ratio of 6.32. 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, LMT has a P/B of 200.21.

These metrics, and several others, help HII earn a Value grade of A, while LMT has been given a Value grade of C.

Both HII and LMT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HII is the superior value option right now.


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Lockheed Martin Corporation (LMT) - free report >>

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