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Embraer-Empresa Brasileira de Aeronautica (ERJ) - free report >>
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Embraer-Empresa Brasileira de Aeronautica (ERJ) - free report >>
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ERJ or EADSY: Which Is the Better Value Stock Right Now?
Investors interested in Aerospace - Defense stocks are likely familiar with Embraer (ERJ - Free Report) and Airbus Group (EADSY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Right now, Embraer is sporting a Zacks Rank of #2 (Buy), while Airbus Group has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ERJ has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
ERJ currently has a forward P/E ratio of 16.86, while EADSY has a forward P/E of 18.65. We also note that ERJ has a PEG ratio of 0.99. 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. EADSY currently has a PEG ratio of 1.51.
Another notable valuation metric for ERJ is its P/B ratio of 0.59. 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, EADSY has a P/B of 7.68.
These are just a few of the metrics contributing to ERJ's Value grade of A and EADSY's Value grade of C.
ERJ stands above EADSY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ERJ is the superior value option right now.