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EMBJ or RTX: Which Is the Better Value Stock Right Now?

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Investors with an interest in Aerospace - Defense stocks have likely encountered both Embraer (EMBJ - Free Report) and RTX (RTX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Embraer and RTX are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that EMBJ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

EMBJ currently has a forward P/E ratio of 23.59, while RTX has a forward P/E of 25.90. We also note that EMBJ has a PEG ratio of 1.59. 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. RTX currently has a PEG ratio of 2.22.

Another notable valuation metric for EMBJ is its P/B ratio of 3.4. 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, RTX has a P/B of 3.72.

These metrics, and several others, help EMBJ earn a Value grade of B, while RTX has been given a Value grade of C.

EMBJ 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 EMBJ is likely the superior value option right now.

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