Investors looking for stocks in the Transportation - Airline sector might want to consider either Delta Air Lines (DAL) or Ryanair (RYAAY). 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.
Both Delta Air Lines and Ryanair have a Zacks Rank of # 1 (Strong Buy) right now. 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 only part of the picture 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
DAL currently has a forward P/E ratio of 7.93, while RYAAY has a forward P/E of 17.92. We also note that DAL has a PEG ratio of 0.57. 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. RYAAY currently has a PEG ratio of 1.12.
Another notable valuation metric for DAL is its P/B ratio of 2.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RYAAY has a P/B of 2.97.
These are just a few of the metrics contributing to DAL's Value grade of A and RYAAY's Value grade of D.
Both DAL and RYAAY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DAL is the superior value option right now.