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Investors with an interest in Transportation - Airline stocks have likely encountered both Spirit (SAVE) and Copa Holdings (CPA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Currently, Spirit has a Zacks Rank of #2 (Buy), while Copa Holdings has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SAVE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
SAVE currently has a forward P/E ratio of 4.44, while CPA has a forward P/E of 7.35. We also note that SAVE has a PEG ratio of 0.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CPA currently has a PEG ratio of 0.58.
Another notable valuation metric for SAVE is its P/B ratio of 0.68. 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, CPA has a P/B of 1.57.
Based on these metrics and many more, SAVE holds a Value grade of A, while CPA has a Value grade of C.
SAVE 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 SAVE is likely the superior value option right now.
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