Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Apple Hospitality REIT (APLE) and Extra Space Storage (EXR). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Apple Hospitality REIT and Extra Space Storage are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that APLE'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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
APLE currently has a forward P/E ratio of 10.32, while EXR has a forward P/E of 17.91. We also note that APLE has a PEG ratio of 3.23. 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. EXR currently has a PEG ratio of 4.58.
Another notable valuation metric for APLE is its P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EXR has a P/B of 2.21.
Based on these metrics and many more, APLE holds a Value grade of B, while EXR has a Value grade of D.
APLE stands above EXR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that APLE is the superior value option right now.
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See Stocks Now >>Apple Hospitality REIT, Inc. (APLE) : Free Stock Analysis Report
Extra Space Storage Inc (EXR) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
