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KNX vs. LSTR: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors with an interest in Transportation - Truck stocks have likely encountered both Knight-Swift Transportation Holdings (KNX) and Landstar System (LSTR). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Knight-Swift Transportation Holdings and Landstar System are both sporting a Zacks Rank of # 1 (Strong Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.

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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.

KNX currently has a forward P/E ratio of 21.09, while LSTR has a forward P/E of 32.89. We also note that KNX has a PEG ratio of 1.41. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LSTR currently has a PEG ratio of 2.74.

Another notable valuation metric for KNX is its P/B ratio of 1.36. 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, LSTR has a P/B of 7.98.

These metrics, and several others, help KNX earn a Value grade of B, while LSTR has been given a Value grade of C.

Both KNX and LSTR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KNX is the superior value option right now.


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KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
 
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
 
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Zacks Investment Research