Investors looking for stocks in the Transportation – Shipping sector might want to consider either Seaspan (SSW) or Kirby (KEX). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Seaspan has a Zacks Rank of #1 (Strong Buy), while Kirby has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SSW is likely seeing its earnings outlook improve to a greater extent. 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 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.
SSW currently has a forward P/E ratio of 8.29, while KEX has a forward P/E of 18.54. We also note that SSW has a PEG ratio of 0.53. 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. KEX currently has a PEG ratio of 1.39.
Another notable valuation metric for SSW is its P/B ratio of 0.43. 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, KEX has a P/B of 1.25.
Based on these metrics and many more, SSW holds a Value grade of A, while KEX has a Value grade of C.
SSW has seen stronger estimate revision activity and sports more attractive valuation metrics than KEX, so it seems like value investors will conclude that SSW is the superior option right now.
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