Investors interested in stocks from the Transportation - Truck sector have probably already heard of Saia (SAIA) and Old Dominion Freight Line (ODFL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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.
Currently, Saia has a Zacks Rank of #2 (Buy), while Old Dominion Freight Line 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 SAIA is likely seeing its earnings outlook improve to a greater extent. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SAIA currently has a forward P/E ratio of 14.11, while ODFL has a forward P/E of 22.07. We also note that SAIA has a PEG ratio of 0.71. 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. ODFL currently has a PEG ratio of 1.39.
Another notable valuation metric for SAIA is its P/B ratio of 3.68. 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 8.28.
Based on these metrics and many more, SAIA holds a Value grade of B, while ODFL has a Value grade of D.
SAIA sticks out from ODFL in both our Zacks Rank and Style Scores models, so value investors will likely feel that SAIA is the better option right now.
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Saia, Inc. (SAIA) : Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
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