Yahoo Finance TXT vs. EADSY: Which Stock Is the Better Value Option?
Investors with an interest in Aerospace - Defense stocks have likely encountered both Textron (TXT) and Airbus Group (EADSY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Textron has a Zacks Rank of #2 (Buy), while Airbus Group 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 TXT is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
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.
TXT currently has a forward P/E ratio of 14.88, while EADSY has a forward P/E of 23.93. We also note that TXT has a PEG ratio of 1.47. 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 1.93.
Another notable valuation metric for TXT is its P/B ratio of 2.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EADSY has a P/B of 7.
These are just a few of the metrics contributing to TXT's Value grade of B and EADSY's Value grade of C.
TXT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TXT is likely the superior value 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
Textron Inc. (TXT) : Free Stock Analysis Report
Airbus Group (EADSY) : Free Stock Analysis Report
