Investors with an interest in Transportation – Truck stocks have likely encountered both Werner Enterprises (WERN) and Heartland Express (HTLD). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Werner Enterprises and Heartland Express 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 WERN has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
WERN currently has a forward P/E ratio of 16.43, while HTLD has a forward P/E of 25.40. We also note that WERN has a PEG ratio of 1.13. 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. HTLD currently has a PEG ratio of 1.69.
Another notable valuation metric for WERN is its P/B ratio of 2.17. 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, HTLD has a P/B of 2.88.
Based on these metrics and many more, WERN holds a Value grade of A, while HTLD has a Value grade of C.
WERN stands above HTLD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WERN is the superior value option right now.
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