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AL vs. GBX: Which Stock Should Value Investors Buy Now?

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Investors interested in Transportation - Equipment and Leasing stocks are likely familiar with Air Lease (AL - Free Report) and Greenbrier Companies (GBX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Right now, Air Lease is sporting a Zacks Rank of #2 (Buy), while Greenbrier Companies has a Zacks Rank of #3 (Hold). This means that AL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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 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.

AL currently has a forward P/E ratio of 8.59, while GBX has a forward P/E of 19.70. We also note that AL has a PEG ratio of 0.54. 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. GBX currently has a PEG ratio of 2.81.

Another notable valuation metric for AL is its P/B ratio of 0.68. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, GBX has a P/B of 1.02.

Based on these metrics and many more, AL holds a Value grade of A, while GBX has a Value grade of C.

AL has seen stronger estimate revision activity and sports more attractive valuation metrics than GBX, so it seems like value investors will conclude that AL is the superior option right now.


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Air Lease Corporation (AL) - free report >>

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