TFII or CHRW: Which Is the Better Value Stock Right Now?

Investors with an interest in Transportation - Services stocks have likely encountered both TFI International Inc. (TFII) and C.H. Robinson Worldwide (CHRW). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

TFI International Inc. and C.H. Robinson Worldwide are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that TFII likely has seen a stronger improvement to its earnings outlook than CHRW has recently. However, value investors will care about much more than just this.

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.

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.

TFII currently has a forward P/E ratio of 20.10, while CHRW has a forward P/E of 23.64. We also note that TFII has a PEG ratio of 0.75. 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. CHRW currently has a PEG ratio of 1.24.

Another notable valuation metric for TFII is its P/B ratio of 3.66. 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, CHRW has a P/B of 10.5.

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

TFII is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TFII is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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