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LDOS or HWM: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Aerospace - Defense sector have probably already heard of Leidos (LDOS - Free Report) and Howmet (HWM - 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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Leidos and Howmet are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that LDOS likely has seen a stronger improvement to its earnings outlook than HWM has recently. But this is only part of the picture for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
LDOS currently has a forward P/E ratio of 16.19, while HWM has a forward P/E of 42.98. We also note that LDOS has a PEG ratio of 1.09. 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. HWM currently has a PEG ratio of 1.54.
Another notable valuation metric for LDOS is its P/B ratio of 4.58. 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, HWM has a P/B of 10.47.
Based on these metrics and many more, LDOS holds a Value grade of A, while HWM has a Value grade of D.
LDOS stands above HWM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LDOS is the superior value option right now.