Investors with an interest in Aerospace - Defense Equipment stocks have likely encountered both CAE (CAE - Free Report) and Teledyne Technologies (TDY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both CAE and Teledyne Technologies are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
CAE currently has a forward P/E ratio of 25.98, while TDY has a forward P/E of 33.95. We also note that CAE has a PEG ratio of 2.60. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TDY currently has a PEG ratio of 4.53.
Another notable valuation metric for CAE is its P/B ratio of 3.99. 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, TDY has a P/B of 4.91.
These are just a few of the metrics contributing to CAE's Value grade of B and TDY's Value grade of D.
Both CAE and TDY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CAE is the superior value option right now.