Investors looking for stocks in the Transportation - Truck sector might want to consider either JB Hunt (JBHT) or Old Dominion Freight Line (ODFL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Currently, JB Hunt has a Zacks Rank of #2 (Buy), while Old Dominion Freight Line has a Zacks Rank of #3 (Hold). This means that JBHT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
JBHT currently has a forward P/E ratio of 28.04, while ODFL has a forward P/E of 37.26. We also note that JBHT has a PEG ratio of 1.87. 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. ODFL currently has a PEG ratio of 3.93.
Another notable valuation metric for JBHT is its P/B ratio of 5.56. 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, ODFL has a P/B of 6.64.
These are just a few of the metrics contributing to JBHT's Value grade of B and ODFL's Value grade of D.
JBHT has seen stronger estimate revision activity and sports more attractive valuation metrics than ODFL, so it seems like value investors will conclude that JBHT is the superior 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
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research