Investors interested in Transportation - Equipment and Leasing stocks are likely familiar with Greenbrier Companies (GBX) and Herc Holdings (HRI). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Greenbrier Companies has a Zacks Rank of #1 (Strong Buy), while Herc Holdings has a Zacks Rank of #5 (Strong Sell). This means that GBX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
GBX currently has a forward P/E ratio of 10.34, while HRI has a forward P/E of 12.95. We also note that GBX has a PEG ratio of 0.88. 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. HRI currently has a PEG ratio of 1.01.
Another notable valuation metric for GBX is its P/B ratio of 1.21. 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, HRI has a P/B of 3.76.
These are just a few of the metrics contributing to GBX's Value grade of A and HRI's Value grade of C.
GBX stands above HRI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GBX is the superior value option right now.
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Free: See Our Top Stock And 4 Runners UpGreenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
Herc Holdings Inc. (HRI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
