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TXT or EADSY: Which Is the Better Value Stock Right Now?

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Investors with an interest in Aerospace - Defense stocks have likely encountered both Textron (TXT - 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.

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.

Currently, Textron has a Zacks Rank of #2 (Buy), while Airbus Group has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TXT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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 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.

TXT currently has a forward P/E ratio of 15.23, while EADSY has a forward P/E of 25.17. We also note that TXT has a PEG ratio of 1.51. 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. EADSY currently has a PEG ratio of 2.03.

Another notable valuation metric for TXT is its P/B ratio of 2.68. 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, EADSY has a P/B of 7.40.

Based on these metrics and many more, TXT holds a Value grade of B, while EADSY has a Value grade of C.

TXT stands above EADSY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TXT is the superior value option right now.


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