LSTR vs. ODFL: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Transportation - Truck sector might want to consider either Landstar System (LSTR) or Old Dominion Freight Line (ODFL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Landstar System has a Zacks Rank of #2 (Buy), while Old Dominion Freight Line has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LSTR has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
LSTR currently has a forward P/E ratio of 26.25, while ODFL has a forward P/E of 36.08. We also note that LSTR has a PEG ratio of 2.19. 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. ODFL currently has a PEG ratio of 2.31.
Another notable valuation metric for LSTR is its P/B ratio of 7.09. 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, ODFL has a P/B of 7.47.
Based on these metrics and many more, LSTR holds a Value grade of B, while ODFL has a Value grade of C.
LSTR stands above ODFL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LSTR is the superior value 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
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
