CAE or TDY: Which Is the Better Value Stock Right Now?

Investors interested in Aerospace - Defense Equipment stocks are likely familiar with CAE CAE and Teledyne Technologies TDY. But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Right now, both CAE and Teledyne Technologies are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.

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.

CAE currently has a forward P/E ratio of 21.82, while TDY has a forward P/E of 22.92. We also note that CAE has a PEG ratio of 1.37. 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. TDY currently has a PEG ratio of 3.12.

Another notable valuation metric for CAE is its P/B ratio of 1.86. 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, TDY has a P/B of 2.24.

These metrics, and several others, help CAE earn a Value grade of B, while TDY has been given a Value grade of C.

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

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