SAVE vs. ALK: Which Stock Should Value Investors Buy Now?

By Zacks Investment ResearchStock MarketsMar 30, 2020 11:40PM ET

www.investing.com/analysis/save-vs-alk-which-stock-should-value-investors-buy-now-200520139

SAVE vs. ALK: Which Stock Should Value Investors Buy Now?

By Zacks Investment Research | Mar 30, 2020 11:40PM ET

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Investors interested in Transportation - Airline stocks are likely familiar with Spirit (SAVE) and Alaska Air Group (ALK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Spirit has a Zacks Rank of #2 (Buy), while Alaska Air Group 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 SAVE has an improving earnings outlook. 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.

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.

SAVE currently has a forward P/E ratio of 22.65, while ALK has a forward P/E of 36.95. We also note that SAVE has a PEG ratio of 1.81. 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. ALK currently has a PEG ratio of 2.54.

Another notable valuation metric for SAVE is its P/B ratio of 0.38. 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, ALK has a P/B of 0.81.

These are just a few of the metrics contributing to SAVE's Value grade of A and ALK's Value grade of C.

SAVE sticks out from ALK in both our Zacks Rank and Style Scores models, so value investors will likely feel that SAVE is the better option right now.

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Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

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SAVE vs. ALK: Which Stock Should Value Investors Buy Now?

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