Yahoo Finance LDOS vs. LMT: Which Stock Is the Better Value Option?
Investors with an interest in Aerospace - Defense stocks have likely encountered both Leidos (LDOS) and Lockheed Martin (LMT). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Leidos has a Zacks Rank of #2 (Buy), while Lockheed Martin has a Zacks Rank of #3 (Hold) right now. This means that LDOS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
LDOS currently has a forward P/E ratio of 16.95, while LMT has a forward P/E of 17.85. We also note that LDOS has a PEG ratio of 1.82. 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. LMT currently has a PEG ratio of 4.27.
Another notable valuation metric for LDOS is its P/B ratio of 4.25. 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, LMT has a P/B of 16.87.
These are just a few of the metrics contributing to LDOS's Value grade of B and LMT's Value grade of C.
LDOS has seen stronger estimate revision activity and sports more attractive valuation metrics than LMT, so it seems like value investors will conclude that LDOS is the superior option right now.
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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
