BAESY vs. HEI: Which Stock Is the Better Value Option?
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 presents investors with the better value opportunity right now? Let's 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.
Currently, Bae Systems PLC has a Zacks Rank of #2 (Buy), while Heico Corporation has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BAESY has an improving earnings outlook. But this is only part of the picture 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BAESY currently has a forward P/E ratio of 16.52, while HEI has a forward P/E of 57.63. We also note that BAESY has a PEG ratio of 1.18. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HEI currently has a PEG ratio of 4.43.
Another notable valuation metric for BAESY is its P/B ratio of 2.84. 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 7.72.
These metrics, and several others, help BAESY earn a Value grade of A, while HEI has been given a Value grade of D.
BAESY has seen stronger estimate revision activity and sports more attractive valuation metrics than HEI, so it seems like value investors will conclude that BAESY is the superior option right now.
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Bae Systems PLC (BAESY) : Free Stock Analysis Report
Heico Corporation (HEI) : Free Stock Analysis Report
