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LDOS vs. LMT: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in Aerospace - Defense stocks are likely familiar with Leidos (LDOS) and Lockheed Martin (LMT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Leidos and Lockheed Martin are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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.

LDOS currently has a forward P/E ratio of 17.30, while LMT has a forward P/E of 17.36. We also note that LDOS has a PEG ratio of 2.31. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LMT currently has a PEG ratio of 2.45.

Another notable valuation metric for LDOS is its P/B ratio of 3.74. 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 26.83.

Based on these metrics and many more, LDOS holds a Value grade of B, while LMT has a Value grade of C.

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


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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
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