Investors interested in stocks from the Transportation - Equipment and Leasing sector have probably already heard of Aircastle (AYR) and Trinity Industries (TRN). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Aircastle and Trinity Industries have a Zacks Rank of # 1 (Strong Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
AYR currently has a forward P/E ratio of 7.64, while TRN has a forward P/E of 16.99. We also note that AYR has a PEG ratio of 0.76. 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. TRN currently has a PEG ratio of 1.70.
Another notable valuation metric for AYR is its P/B ratio of 0.76. 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, TRN has a P/B of 0.89.
These metrics, and several others, help AYR earn a Value grade of A, while TRN has been given a Value grade of C.
Both AYR and TRN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AYR is the superior value option right now.
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Aircastle Limited (AYR) : Free Stock Analysis Report
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