Investors looking for stocks in the Aerospace - Defense sector might want to consider either Wesco Aircraft Holdings (WAIR - Free Report) or General Dynamics (GD - 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.
Wesco Aircraft Holdings has a Zacks Rank of #2 (Buy), while General Dynamics has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WAIR has an improving earnings outlook. But this is only part of the picture 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.
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.
WAIR currently has a forward P/E ratio of 12.44, while GD has a forward P/E of 15.11. We also note that WAIR has a PEG ratio of 1.04. 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. GD currently has a PEG ratio of 1.70.
Another notable valuation metric for WAIR is its P/B ratio of 1.47. 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, GD has a P/B of 4.19.
Based on these metrics and many more, WAIR holds a Value grade of A, while GD has a Value grade of C.
WAIR stands above GD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WAIR is the superior value option right now.