LDOS or NOC: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Aerospace - Defense sector have probably already heard of Leidos (LDOS) and Northrop Grumman (NOC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Leidos is sporting a Zacks Rank of #1 (Strong Buy), while Northrop Grumman has a Zacks Rank of #3 (Hold). 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 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
LDOS currently has a forward P/E ratio of 17.63, while NOC has a forward P/E of 18.44. We also note that LDOS has a PEG ratio of 1.59. 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. NOC currently has a PEG ratio of 2.12.
Another notable valuation metric for LDOS is its P/B ratio of 4.63. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NOC has a P/B of 4.74.
These are just a few of the metrics contributing to LDOS's Value grade of B and NOC's Value grade of C.
LDOS has seen stronger estimate revision activity and sports more attractive valuation metrics than NOC, 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
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
