When it comes to the Aerospace-Defense Equipment sector, CAE (CAE) and Teledyne Technologies (TDY) are two prominent players that often pique the interest of investors. But which one truly stands out as the more compelling value proposition? To answer that question, we’ll delve into their valuations and factor in the renowned Zacks Rank.
The Zacks Rank, a well-respected system, places significant emphasis on earnings estimates and their revisions, while our Style Scores provide an additional layer of analysis to identify stocks with specific characteristics. Currently, both CAE and Teledyne Technologies boast a Zacks Rank of #2 (Buy), signaling positive revisions to their earnings estimates, suggesting an optimistic outlook for both companies.
Value investors, however, go beyond earnings estimates. They meticulously analyze traditional valuation metrics to uncover stocks they believe are undervalued at their current market prices. Our Value category employs a comprehensive approach, evaluating stocks based on pivotal metrics such as the P/E ratio, P/S ratio, earnings yield, cash flow per share, and other critical fundamentals that value investors rely on.
Looking at CAE, its forward P/E ratio stands at 21.82, compared to TDY’s forward P/E of 22.92. Another crucial metric, the PEG ratio, takes into account the stock’s expected earnings growth rate alongside the P/E ratio. CAE’s PEG ratio currently sits at 1.37, while TDY’s PEG ratio is 3.12. The P/B ratio, which compares a stock’s market value to its book value (assets minus liabilities), provides further insights. CAE’s P/B ratio is 1.86, while TDY’s P/B ratio is 2.24.
These metrics, along with several others, have earned CAE a Value grade of B, whereas TDY has received a Value grade of C. Both companies demonstrate impressive performance and solid earnings outlooks, but based on these valuation figures, CAE emerges as the superior value option at present.
