U.S. Markets close in 6 hrs 30 mins

CW or HXL: Which Is the Better Value Stock Right Now?

Zacks Equity Research
Mutual Fund Report for PGOFX

Investors looking for stocks in the Aerospace - Defense Equipment sector might want to consider either Curtiss-Wright (CW) or Hexcel (HXL). 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.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Curtiss-Wright is sporting a Zacks Rank of #1 (Strong Buy), while Hexcel has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CW likely has seen a stronger improvement to its earnings outlook than HXL has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

CW currently has a forward P/E ratio of 18.08, while HXL has a forward P/E of 19.16. We also note that CW has a PEG ratio of 1.42. 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. HXL currently has a PEG ratio of 2.27.

Another notable valuation metric for CW is its P/B ratio of 3.11. 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, HXL has a P/B of 3.67.

These are just a few of the metrics contributing to CW's Value grade of B and HXL's Value grade of C.

CW stands above HXL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CW is the superior value 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
 
Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
 
Hexcel Corporation (HXL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.