Investors interested in stocks from the Aerospace - Defense Equipment sector have probably already heard of Curtiss-Wright (CW - Free Report) and CAE (CAE - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Curtiss-Wright has a Zacks Rank of #2 (Buy), while CAE 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 CW has an improving earnings outlook. 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.
CW currently has a forward P/E ratio of 17.27, while CAE has a forward P/E of 26.18. We also note that CW has a PEG ratio of 2.47. 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. CAE currently has a PEG ratio of 2.62.
Another notable valuation metric for CW is its P/B ratio of 3.19. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CAE has a P/B of 3.94.
These are just a few of the metrics contributing to CW's Value grade of B and CAE's Value grade of D.
CW has seen stronger estimate revision activity and sports more attractive valuation metrics than CAE, so it seems like value investors will conclude that CW is the superior option right now.