Investors with an interest in Transportation – Shipping stocks have likely encountered both Global Ship Lease (GSL) and DHT Holdings (DHT). 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Global Ship Lease is sporting a Zacks Rank of #1 (Strong Buy), while DHT Holdings has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GSL likely has seen a stronger improvement to its earnings outlook than DHT has recently. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GSL currently has a forward P/E ratio of 3.56, while DHT has a forward P/E of 39.37. We also note that GSL has a PEG ratio of 0.71. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. DHT currently has a PEG ratio of 7.87.
Another notable valuation metric for GSL is its P/B ratio of 0.20. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, DHT has a P/B of 0.92.
Based on these metrics and many more, GSL holds a Value grade of A, while DHT has a Value grade of D.
GSL has seen stronger estimate revision activity and sports more attractive valuation metrics than DHT, so it seems like value investors will conclude that GSL is the superior option right now.
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