Investors with an interest in Transportation - Shipping stocks have likely encountered both Costamare (CMRE - Free Report) and Martin Midstream Partners L.P. (MMLP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Costamare is sporting a Zacks Rank of #2 (Buy), while Martin Midstream Partners L.P. 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 CMRE has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CMRE currently has a forward P/E ratio of 5.88, while MMLP has a forward P/E of 14.80. We also note that CMRE has a PEG ratio of 1.18. 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. MMLP currently has a PEG ratio of 7.40.
Another notable valuation metric for CMRE is its P/B ratio of 0.37. 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, MMLP has a P/B of 1.48.
These are just a few of the metrics contributing to CMRE's Value grade of A and MMLP's Value grade of C.
CMRE has seen stronger estimate revision activity and sports more attractive valuation metrics than MMLP, so it seems like value investors will conclude that CMRE is the superior option right now.