ARCB or SAIA: 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 Saia (SAIA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, ArcBest is sporting a Zacks Rank of #1 (Strong Buy), while Saia has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ARCB has an improving earnings outlook. 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.

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.

ARCB currently has a forward P/E ratio of 24.09, while SAIA has a forward P/E of 36.74. We also note that ARCB has a PEG ratio of 0.64. 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. SAIA currently has a PEG ratio of 2.00.

Another notable valuation metric for ARCB is its P/B ratio of 2.55. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SAIA has a P/B of 4.27.

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

ARCB has seen stronger estimate revision activity and sports more attractive valuation metrics than SAIA, so it seems like value investors will conclude that ARCB is the superior option right now.

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

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