Investors looking for stocks in the Transportation - Equipment and Leasing sector might want to consider either Greenbrier Companies (GBX - Free Report) or Westinghouse Air Brake Technologies (WAB - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Greenbrier Companies and Westinghouse Air Brake Technologies are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GBX likely has seen a stronger improvement to its earnings outlook than WAB has recently. But this is only part of the picture for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
GBX currently has a forward P/E ratio of 12.70, while WAB has a forward P/E of 26.32. We also note that GBX has a PEG ratio of 1.34. 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. WAB currently has a PEG ratio of 2.29.
Another notable valuation metric for GBX is its P/B ratio of 1.27. 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, WAB has a P/B of 3.28.
These metrics, and several others, help GBX earn a Value grade of A, while WAB has been given a Value grade of D.
GBX has seen stronger estimate revision activity and sports more attractive valuation metrics than WAB, so it seems like value investors will conclude that GBX is the superior option right now.