Back to top

Image: Bigstock

CAE vs. HXL: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors looking for stocks in the Aerospace - Defense Equipment sector might want to consider either CAE (CAE - Free Report) or Hexcel (HXL - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, CAE is sporting a Zacks Rank of #2 (Buy), while Hexcel has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CAE likely has seen a stronger improvement to its earnings outlook than HXL has recently. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

CAE currently has a forward P/E ratio of 30.52, while HXL has a forward P/E of 35.12. We also note that CAE has a PEG ratio of 3.82. 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. HXL currently has a PEG ratio of 6.23.

Another notable valuation metric for CAE is its P/B ratio of 2.37. 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, HXL has a P/B of 2.61.

Based on these metrics and many more, CAE holds a Value grade of B, while HXL has a Value grade of D.

CAE sticks out from HXL in both our Zacks Rank and Style Scores models, so value investors will likely feel that CAE is the better option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Hexcel Corporation (HXL) - free report >>

CAE Inc (CAE) - free report >>

Published in