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Investors interested in stocks from the Transportation - Airline sector have probably already heard of International Consolidated Airlines Group SA (ICAGY) and Southwest Airlines (LUV). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
International Consolidated Airlines Group SA and Southwest Airlines are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ICAGY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
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.
ICAGY currently has a forward P/E ratio of 6.15, while LUV has a forward P/E of 20.02. We also note that ICAGY has a PEG ratio of 0.63. 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. LUV currently has a PEG ratio of 3.24.
Another notable valuation metric for ICAGY is its P/B ratio of 1.45. 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, LUV has a P/B of 1.89.
Based on these metrics and many more, ICAGY holds a Value grade of B, while LUV has a Value grade of C.
ICAGY sticks out from LUV in both our Zacks Rank and Style Scores models, so value investors will likely feel that ICAGY is the better option right now.
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International Consolidated Airlines Group SA (ICAGY) : Free Stock Analysis Report