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WAIR vs. GD: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Aerospace - Defense stocks have likely encountered both Wesco Aircraft Holdings and General Dynamics (GD - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Wesco Aircraft Holdings has a Zacks Rank of #2 (Buy), while General Dynamics has a Zacks Rank of #3 (Hold). This means that WAIR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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.

WAIR currently has a forward P/E ratio of 12.66, while GD has a forward P/E of 15.64. We also note that WAIR has a PEG ratio of 1.05. 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. GD currently has a PEG ratio of 1.76.

Another notable valuation metric for WAIR is its P/B ratio of 1.51. 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, GD has a P/B of 4.34.

These are just a few of the metrics contributing to WAIR's Value grade of A and GD's Value grade of C.

WAIR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WAIR is likely the superior value option right now.


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