Investors interested in REIT and Equity Trust – Other stocks are likely familiar with Empire State Realty Trust (ESRT) and HCP (PEAK). But which of these two stocks offers value investors a better bang for their buck right now? We’ll need to 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.
Empire State Realty Trust has a Zacks Rank of #2 (Buy), while HCP has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ESRT likely has seen a stronger improvement to its earnings outlook than PEAK has recently. But this is only part of the picture 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.
ESRT currently has a forward P/E ratio of 15.89, while PEAK has a forward P/E of 19.27. We also note that ESRT has a PEG ratio of 3.97. 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. PEAK currently has a PEG ratio of 6.62.
Another notable valuation metric for ESRT is its P/B ratio of 1.28. 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, PEAK has a P/B of 2.57.
These are just a few of the metrics contributing to ESRT’s Value grade of B and PEAK’s Value grade of D.
ESRT stands above PEAK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ESRT is the superior value option right now.
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