Investors interested in Transportation - Services stocks are likely familiar with Echo Global Logistics (ECHO) and Grupo Aeroportuario del Sureste (ASR). 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.
Echo Global Logistics has a Zacks Rank of #2 (Buy), while Grupo Aeroportuario del Sureste has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ECHO has an improving earnings outlook. However, value investors will care about much more than just this.
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.
ECHO currently has a forward P/E ratio of 12.05, while ASR has a forward P/E of 19.88. We also note that ECHO has a PEG ratio of 0.69. 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. ASR currently has a PEG ratio of 4.52.
Another notable valuation metric for ECHO is its P/B ratio of 1.65. 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, ASR has a P/B of 2.61.
Based on these metrics and many more, ECHO holds a Value grade of A, while ASR has a Value grade of D.
ECHO stands above ASR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ECHO is the superior value option right now.
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