DLAKY vs. ULCC: Which Stock Is the Better Value Option?

Investors looking for stocks in the Transportation - Airline sector might want to consider either Deutsche Lufthansa AG (DLAKY) or Frontier Group Holdings (ULCC). 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.

Currently, Deutsche Lufthansa AG has a Zacks Rank of #2 (Buy), while Frontier Group Holdings has a Zacks Rank of #3 (Hold). This means that DLAKY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

DLAKY currently has a forward P/E ratio of 6.42, while ULCC has a forward P/E of 27.95. We also note that DLAKY has a PEG ratio of 0.48. 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. ULCC currently has a PEG ratio of 0.63.

Another notable valuation metric for DLAKY is its P/B ratio of 0.85. 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, ULCC has a P/B of 1.69.

These metrics, and several others, help DLAKY earn a Value grade of A, while ULCC has been given a Value grade of C.

DLAKY sticks out from ULCC in both our Zacks Rank and Style Scores models, so value investors will likely feel that DLAKY is the better option right now.

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Deutsche Lufthansa AG (DLAKY): Free Stock Analysis Report

Frontier Group Holdings, Inc. (ULCC): Free Stock Analysis Report

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

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