ARCB or XPO: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Transportation - Truck sector have probably already heard of ArcBest (ARCB) and XPO (XPO). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.

Right now, both ArcBest and XPO are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ARCB currently has a forward P/E ratio of 23.64, while XPO has a forward P/E of 43.54. We also note that ARCB has a PEG ratio of 0.68. 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. XPO currently has a PEG ratio of 2.47.

Another notable valuation metric for ARCB is its P/B ratio of 2.16. 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, XPO has a P/B of 13.37.

Based on these metrics and many more, ARCB holds a Value grade of B, while XPO has a Value grade of D.

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

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

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