Investors interested in stocks from the Transportation - Services sector have probably already heard of XPO Logistics (NYSE:XPO) and Grupo Aeroportuario del Pacifico (NYSE:PAC). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
XPO Logistics and Grupo Aeroportuario del Pacifico are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that XPO has an improving earnings outlook. But this is only part of the picture 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.
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.
XPO currently has a forward P/E ratio of 23.11, while PAC has a forward P/E of 24.68. We also note that XPO has a PEG ratio of 2.07. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PAC currently has a PEG ratio of 2.08.
Another notable valuation metric for XPO is its P/B ratio of 3.69. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PAC has a P/B of 5.52.
These metrics, and several others, help XPO earn a Value grade of B, while PAC has been given a Value grade of D.
XPO 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 XPO is likely the superior value option right now.
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