TXT or EADSY: Which Is the Better Value Stock Right Now?
Investors interested in Aerospace - Defense stocks are likely familiar with Textron (TXT) and Airbus Group (EADSY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Textron and Airbus Group are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TXT has an improving earnings outlook. 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.
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.
TXT currently has a forward P/E ratio of 13.99, while EADSY has a forward P/E of 21.79. We also note that TXT has a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EADSY currently has a PEG ratio of 1.76.
Another notable valuation metric for TXT is its P/B ratio of 2.11. 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, EADSY has a P/B of 6.49.
These metrics, and several others, help TXT earn a Value grade of A, while EADSY has been given a Value grade of C.
TXT has seen stronger estimate revision activity and sports more attractive valuation metrics than EADSY, so it seems like value investors will conclude that TXT is the superior option right now.
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Textron Inc. (TXT) : Free Stock Analysis Report
Airbus Group (EADSY) : Free Stock Analysis Report
