Investors with an interest in Transportation - Truck stocks have likely encountered both Landstar System (LSTR) and Old Dominion Freight Line (ODFL). 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.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Landstar System is sporting a Zacks Rank of #2 (Buy), while Old Dominion Freight Line has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LSTR likely has seen a stronger improvement to its earnings outlook than ODFL has recently. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
LSTR currently has a forward P/E ratio of 18.12, while ODFL has a forward P/E of 24.81. We also note that LSTR has a PEG ratio of 1.51. 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. ODFL currently has a PEG ratio of 1.76.
Another notable valuation metric for LSTR is its P/B ratio of 6.82. 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, ODFL has a P/B of 9.07.
Based on these metrics and many more, LSTR holds a Value grade of B, while ODFL has a Value grade of D.
LSTR has seen stronger estimate revision activity and sports more attractive valuation metrics than ODFL, so it seems like value investors will conclude that LSTR is the superior option right now.
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