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LDOS vs. LMT: Which Stock Is the Better Value Option?

Zacks Equity Research
In the latest trading session, Estee Lauder (EL) closed at $190.83, marking a +0.31% move from the previous day.

Investors looking for stocks in the Aerospace - Defense sector might want to consider either Leidos (LDOS) or Lockheed Martin (LMT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both Leidos and Lockheed Martin have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

LDOS currently has a forward P/E ratio of 17.11, while LMT has a forward P/E of 17.35. We also note that LDOS has a PEG ratio of 2.28. 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. LMT currently has a PEG ratio of 2.47.

Another notable valuation metric for LDOS is its P/B ratio of 3.44. 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, LMT has a P/B of 39.85.

These metrics, and several others, help LDOS earn a Value grade of B, while LMT has been given a Value grade of C.

Both LDOS and LMT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LDOS is the superior value option right now.


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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
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