Yahoo Finance LHX vs. NOC: Which Stock Is the Better Value Option?
Investors interested in stocks from the Aerospace - Defense sector have probably already heard of L3Harris (LHX) and Northrop Grumman (NOC). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, L3Harris is sporting a Zacks Rank of #2 (Buy), while Northrop Grumman has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LHX is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
LHX currently has a forward P/E ratio of 16.52, while NOC has a forward P/E of 18.99. We also note that LHX has a PEG ratio of 1.89. 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. NOC currently has a PEG ratio of 1.93.
Another notable valuation metric for LHX is its P/B ratio of 2.15. 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, NOC has a P/B of 4.88.
Based on these metrics and many more, LHX holds a Value grade of B, while NOC has a Value grade of C.
LHX sticks out from NOC in both our Zacks Rank and Style Scores models, so value investors will likely feel that LHX is the better 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
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
