Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Hersha Hospitality (HT) and Ventas (VTR). 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, Hersha Hospitality has a Zacks Rank of #2 (Buy), while Ventas has a Zacks Rank of #3 (Hold). This means that HT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HT currently has a forward P/E ratio of 10, while VTR has a forward P/E of 14.69. We also note that HT has a PEG ratio of 1.82. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. VTR currently has a PEG ratio of 3.89.
Another notable valuation metric for HT is its P/B ratio of 0.88. 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, VTR has a P/B of 1.98.
These are just a few of the metrics contributing to HT's Value grade of A and VTR's Value grade of D.
HT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HT is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hersha Hospitality Trust (HT): Free Stock Analysis Report Ventas, Inc. (VTR): Free Stock Analysis Report To read this article on Zacks.com click here.