Investors interested in Aerospace - Defense stocks are likely familiar with Wesco Aircraft Holdings (WAIR - Free Report) and General Dynamics (GD - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Wesco Aircraft Holdings has a Zacks Rank of #2 (Buy), while General Dynamics has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that WAIR likely has seen a stronger improvement to its earnings outlook than GD has recently. 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.
WAIR currently has a forward P/E ratio of 14.67, while GD has a forward P/E of 16.91. We also note that WAIR has a PEG ratio of 1.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GD currently has a PEG ratio of 1.75.
Another notable valuation metric for WAIR is its P/B ratio of 1.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GD has a P/B of 4.70.
These metrics, and several others, help WAIR earn a Value grade of B, while GD has been given a Value grade of C.
WAIR sticks out from GD in both our Zacks Rank and Style Scores models, so value investors will likely feel that WAIR is the better option right now.