Investors interested in stocks from the Transportation - Truck sector have probably already heard of Knight-Swift Transportation Holdings (KNX) 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Knight-Swift Transportation Holdings has a Zacks Rank of #2 (Buy), while Saia has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KNX has an improving earnings outlook. But this is only part of the picture for value investors.
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.
KNX currently has a forward P/E ratio of 28.84, while SAIA has a forward P/E of 30.46. We also note that KNX has a PEG ratio of 0.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SAIA currently has a PEG ratio of 2.81.
Another notable valuation metric for KNX is its P/B ratio of 1.55. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SAIA has a P/B of 3.4.
These metrics, and several others, help KNX earn a Value grade of B, while SAIA has been given a Value grade of D.
KNX stands above SAIA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KNX is the superior value option right now.
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Knight-Swift Transportation Holdings Inc. (KNX): Free Stock Analysis Report
Saia, Inc. (SAIA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).