Investors interested in stocks from the Transportation - Shipping sector have probably already heard of Seaspan (SSW - Free Report) and Martin Midstream Partners L.P. (MMLP - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Seaspan is sporting a Zacks Rank of #2 (Buy), while Martin Midstream Partners L.P. 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 SSW is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
SSW currently has a forward P/E ratio of 8.63, while MMLP has a forward P/E of 17.35. We also note that SSW has a PEG ratio of 0.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MMLP currently has a PEG ratio of 8.67.
Another notable valuation metric for SSW is its P/B ratio of 0.45. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MMLP has a P/B of 1.73.
These metrics, and several others, help SSW earn a Value grade of A, while MMLP has been given a Value grade of C.
SSW stands above MMLP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SSW is the superior value option right now.