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CBHMY or AVAV: Which Is the Better Value Stock Right Now?

Zacks Equity Research
Updated
BOJA vs. SBUX: Which Stock Is the Better Value Option?

Investors with an interest in Aerospace - Defense Equipment stocks have likely encountered both COBHAM PLC (CBHMY) and AeroVironment (AVAV). 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.

COBHAM PLC has a Zacks Rank of #2 (Buy), while AeroVironment has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CBHMY has an improving earnings outlook. However, value investors will care about much more than just this.

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.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

CBHMY currently has a forward P/E ratio of 24.15, while AVAV has a forward P/E of 84.89. We also note that CBHMY has a PEG ratio of 4.03. 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. AVAV currently has a PEG ratio of 4.24.

Another notable valuation metric for CBHMY is its P/B ratio of 2.83. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AVAV has a P/B of 5.

These are just a few of the metrics contributing to CBHMY's Value grade of B and AVAV's Value grade of F.

CBHMY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CBHMY is likely the superior value option right now.


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COBHAM PLC (CBHMY) : Free Stock Analysis Report
 
AeroVironment, Inc. (AVAV) : Free Stock Analysis Report
 
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Zacks Investment Research