Investors looking for stocks in the Transportation - Equipment and Leasing sector might want to consider either Fly Leasing (FLY) or Trinity Industries (TRN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Currently, Fly Leasing has a Zacks Rank of #1 (Strong Buy), while Trinity Industries has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FLY is likely seeing its earnings outlook improve to a greater extent. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
FLY currently has a forward P/E ratio of 4.12, while TRN has a forward P/E of 17.11. We also note that FLY has a PEG ratio of 0.41. 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. TRN currently has a PEG ratio of 1.71.
Another notable valuation metric for FLY is its P/B ratio of 0.48. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TRN has a P/B of 0.68.
Based on these metrics and many more, FLY holds a Value grade of A, while TRN has a Value grade of C.
FLY stands above TRN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FLY is the superior value option right now.
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