Investors with an interest in Aerospace - Defense stocks have likely encountered both Northrop Grumman (NOC) and Lockheed Martin (LMT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Northrop Grumman and Lockheed Martin are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NOC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

NOC currently has a forward P/E ratio of 20.99, while LMT has a forward P/E of 23.03. We also note that NOC has a PEG ratio of 2.42. 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. LMT currently has a PEG ratio of 4.91.

Another notable valuation metric for NOC is its P/B ratio of 5.40. 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, LMT has a P/B of 23.53.

Based on these metrics and many more, NOC holds a Value grade of B, while LMT has a Value grade of C.

NOC has seen stronger estimate revision activity and sports more attractive valuation metrics than LMT, so it seems like value investors will conclude that NOC is the superior option right now.

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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report