CAE vs. TDY: Which Stock Is the Better Value Option?

Investors looking for stocks in the Aerospace – Defense Equipment sector might want to consider either CAE (CAE) or Teledyne Technologies (TDY). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both CAE and Teledyne Technologies have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

CAE currently has a forward P/E ratio of 25.76, while TDY has a forward P/E of 33.17. We also note that CAE has a PEG ratio of 2.58. 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. TDY currently has a PEG ratio of 4.42.

Another notable valuation metric for CAE is its P/B ratio of 3.96. 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, TDY has a P/B of 4.90.

These metrics, and several others, help CAE earn a Value grade of B, while TDY has been given a Value grade of D.

Both CAE and TDY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CAE is the superior value option right now.

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