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BAESY vs. HEI: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Aerospace - Defense Equipment sector have probably already heard of Bae Systems PLC (BAESY - Free Report) and Heico Corporation (HEI - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Bae Systems PLC is sporting a Zacks Rank of #2 (Buy), while Heico Corporation has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BAESY likely has seen a stronger improvement to its earnings outlook than HEI has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

BAESY currently has a forward P/E ratio of 17.17, while HEI has a forward P/E of 52.59. We also note that BAESY has a PEG ratio of 1.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HEI currently has a PEG ratio of 3.10.

Another notable valuation metric for BAESY is its P/B ratio of 3.40. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HEI has a P/B of 7.77.

These metrics, and several others, help BAESY earn a Value grade of B, while HEI has been given a Value grade of F.

BAESY 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 BAESY is likely the superior value option right now.


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