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CAI vs. WAB: Which Stock Should Value Investors Buy Now?

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Investors interested in Transportation - Equipment and Leasing stocks are likely familiar with CAI International and Westinghouse Air Brake Technologies (WAB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Right now, CAI International is sporting a Zacks Rank of #1 (Strong Buy), while Westinghouse Air Brake Technologies has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CAI is likely seeing its earnings outlook improve to a greater extent. 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.

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.

CAI currently has a forward P/E ratio of 5.73, while WAB has a forward P/E of 15.57. We also note that CAI has a PEG ratio of 0.72. 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. WAB currently has a PEG ratio of 1.35.

Another notable valuation metric for CAI is its P/B ratio of 0.79. 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, WAB has a P/B of 2.36.

These metrics, and several others, help CAI earn a Value grade of A, while WAB has been given a Value grade of D.

CAI has seen stronger estimate revision activity and sports more attractive valuation metrics than WAB, so it seems like value investors will conclude that CAI is the superior option right now.


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