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BAESY vs. HEI: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Aerospace - Defense Equipment sector might want to consider either Bae Systems PLC (BAESY) or Heico Corporation (HEI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Bae Systems PLC is sporting a Zacks Rank of #2 (Buy), while Heico Corporation has a Zacks Rank of #3 (Hold). This means that BAESY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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.

BAESY currently has a forward P/E ratio of 13.93, while HEI has a forward P/E of 57.65. We also note that BAESY has a PEG ratio of 2.65. 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. HEI currently has a PEG ratio of 4.79.

Another notable valuation metric for BAESY is its P/B ratio of 2.86. 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, HEI has a P/B of 8.65.

Based on these metrics and many more, BAESY holds a Value grade of A, while HEI has a Value grade of D.

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


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Heico Corporation (HEI) : Free Stock Analysis Report
 
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