BAESY vs. HEI: Which Stock Is the Better Value Option?
Investors interested in stocks from the Aerospace - Defense Equipment sector have probably already heard of Bae Systems PLC (BAESY) and Heico Corporation (HEI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Bae Systems PLC has a Zacks Rank of #1 (Strong Buy), while Heico Corporation has a Zacks Rank of #3 (Hold) right now. 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 piece of the puzzle 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 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.
BAESY currently has a forward P/E ratio of 16.40, while HEI has a forward P/E of 58.12. We also note that BAESY has a PEG ratio of 1.17. 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 4.16.
Another notable valuation metric for BAESY is its P/B ratio of 2.82. 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, HEI has a P/B of 7.81.
Based on these metrics and many more, BAESY holds a Value grade of B, 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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Bae Systems PLC (BAESY) : Free Stock Analysis Report
Heico Corporation (HEI) : Free Stock Analysis Report
