LHX vs. RTX: Which Stock Is the Better Value Option?
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
L3Harris and RTX are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LHX has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
LHX currently has a forward P/E ratio of 24.08, while RTX has a forward P/E of 24.15. We also note that LHX has a PEG ratio of 2.01. 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. RTX currently has a PEG ratio of 2.61.
Another notable valuation metric for LHX is its P/B ratio of 2.46. 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, RTX has a P/B of 3.04.
These metrics, and several others, help LHX earn a Value grade of B, while RTX has been given a Value grade of C.
LHX stands above RTX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LHX is the superior value option right now.
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L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
RTX Corporation (RTX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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