Investors looking for stocks in the Transportation - Shipping sector might want to consider either Teekay Tankers (TNK) or Kirby (KEX). But which of these two stocks presents investors with the better value opportunity right now? 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.
Teekay Tankers has a Zacks Rank of #1 (Strong Buy), while Kirby has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TNK is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
TNK currently has a forward P/E ratio of 1.94, while KEX has a forward P/E of 23.67. We also note that TNK has a PEG ratio of 0.65. 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. KEX currently has a PEG ratio of 2.85.
Another notable valuation metric for TNK is its P/B ratio of 0.54. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, KEX has a P/B of 0.93.
These are just a few of the metrics contributing to TNK's Value grade of A and KEX's Value grade of D.
TNK has seen stronger estimate revision activity and sports more attractive valuation metrics than KEX, so it seems like value investors will conclude that TNK 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
Teekay Tankers Ltd (TNK) : Free Stock Analysis Report
Kirby Corporation (KEX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research