Investors interested in Transportation - Truck stocks are likely familiar with Landstar System (NASDAQ:LSTR) and Old Dominion Freight Line (NASDAQ:ODFL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Landstar System and Old Dominion Freight Line are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that LSTR likely has seen a stronger improvement to its earnings outlook than ODFL has recently. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
LSTR currently has a forward P/E ratio of 27.05, while ODFL has a forward P/E of 35.53. We also note that LSTR has a PEG ratio of 2.25. 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. ODFL currently has a PEG ratio of 2.28.
Another notable valuation metric for LSTR is its P/B ratio of 7.31. 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, ODFL has a P/B of 7.34.
These are just a few of the metrics contributing to LSTR's Value grade of B and ODFL's Value grade of C.
LSTR 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 LSTR 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
Landstar System, Inc. (LSTR): Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL): Free Stock Analysis Report
To read this article on Zacks.com click here.