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GSL vs. DHT: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Transportation - Shipping sector might want to consider either Global Ship Lease (GSL - Free Report) or DHT Holdings (DHT - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Global Ship Lease has a Zacks Rank of #1 (Strong Buy), while DHT Holdings has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GSL has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GSL currently has a forward P/E ratio of 3.96, while DHT has a forward P/E of 39.23. We also note that GSL has a PEG ratio of 0.79. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DHT currently has a PEG ratio of 7.85.

Another notable valuation metric for GSL is its P/B ratio of 0.23. 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, DHT has a P/B of 0.91.

These metrics, and several others, help GSL earn a Value grade of A, while DHT has been given a Value grade of D.

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


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