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BAESY vs. HEI: Which Stock Is the Better Value Option?
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.
Currently, both Bae Systems PLC and Heico Corporation are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
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.
BAESY currently has a forward P/E ratio of 19.26, while HEI has a forward P/E of 65.27. We also note that BAESY has a PEG ratio of 1.55. 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 3.36.
Another notable valuation metric for BAESY is its P/B ratio of 3.80. 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, HEI has a P/B of 10.69.
Based on these metrics and many more, BAESY holds a Value grade of B, while HEI has a Value grade of D.
Both BAESY and HEI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BAESY is the superior value option right now.