Investors interested in Transportation - Truck stocks are likely familiar with ArcBest (ARCB - Free Report) and Landstar System (LSTR - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
ArcBest has a Zacks Rank of #1 (Strong Buy), while Landstar System has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that ARCB likely has seen a stronger improvement to its earnings outlook than LSTR has recently. But this is just one factor that value investors are interested in.
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.
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.
ARCB currently has a forward P/E ratio of 14.84, while LSTR has a forward P/E of 19.52. We also note that ARCB has a PEG ratio of 0.37. 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. LSTR currently has a PEG ratio of 1.45.
Another notable valuation metric for ARCB is its P/B ratio of 1.85. 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, LSTR has a P/B of 7.36.
These are just a few of the metrics contributing to ARCB's Value grade of A and LSTR's Value grade of C.
ARCB sticks out from LSTR in both our Zacks Rank and Style Scores models, so value investors will likely feel that ARCB is the better option right now.