U.S. Markets close in 5 hrs 34 mins

ALK or CPA: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Transportation - Airline sector might want to consider either Alaska Air Group (ALK) or Copa Holdings (CPA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Alaska Air Group has a Zacks Rank of #2 (Buy), while Copa Holdings has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that ALK likely has seen a stronger improvement to its earnings outlook than CPA has recently. 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.

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.

ALK currently has a forward P/E ratio of 10.82, while CPA has a forward P/E of 12.86. We also note that ALK has a PEG ratio of 0.54. 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. CPA currently has a PEG ratio of 0.81.

Another notable valuation metric for ALK is its P/B ratio of 2.09. 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, CPA has a P/B of 2.24.

Based on these metrics and many more, ALK holds a Value grade of A, while CPA has a Value grade of C.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research