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BAESY or HEI: Which Is the Better Value Stock Right Now?

Investors interested in Aerospace - Defense Equipment stocks are likely familiar with Bae Systems PLC (BAESY) and Heico Corporation (HEI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, both Bae Systems PLC and Heico Corporation are holding a Zacks Rank of # 2 (Buy). 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 piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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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.

BAESY currently has a forward P/E ratio of 20.73, while HEI has a forward P/E of 61.80. We also note that BAESY has a PEG ratio of 1.69. 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. HEI currently has a PEG ratio of 3.33.

Another notable valuation metric for BAESY is its P/B ratio of 4.04. 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, HEI has a P/B of 9.02.

These are just a few of the metrics contributing to BAESY's Value grade of B and HEI's Value grade of D.

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

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Bae Systems PLC (BAESY) : Free Stock Analysis Report

Heico Corporation (HEI) : Free Stock Analysis Report

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Zacks Investment Research