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AER vs. WAB: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Transportation - Equipment and Leasing sector have probably already heard of AerCap (AER - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, AerCap has a Zacks Rank of #1 (Strong Buy), while Westinghouse Air Brake Technologies has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AER has an improving earnings outlook. 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.

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.

AER currently has a forward P/E ratio of 9.21, while WAB has a forward P/E of 23.12. We also note that AER has a PEG ratio of 0.71. 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. WAB currently has a PEG ratio of 1.59.

Another notable valuation metric for AER is its P/B ratio of 1.38. 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, WAB has a P/B of 3.17.

These are just a few of the metrics contributing to AER's Value grade of B and WAB's Value grade of D.

AER has seen stronger estimate revision activity and sports more attractive valuation metrics than WAB, so it seems like value investors will conclude that AER is the superior option right now.


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