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CW vs. HXL: Which Stock Should Value Investors Buy Now?

Park National (PRK) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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 companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Curtiss-Wright and Hexcel are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that CW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 17.29, while HXL has a forward P/E of 19.82. We also note that CW has a PEG ratio of 1.29. 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. HXL currently has a PEG ratio of 2.34.

Another notable valuation metric for CW is its P/B ratio of 2.91. 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, HXL has a P/B of 3.78.

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

CW is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CW is likely the superior value option right now.


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Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
 
Hexcel Corporation (HXL) : Free Stock Analysis Report
 
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