Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Cousins Properties (CUZ) and EastGroup Properties (EGP). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Right now, Cousins Properties is sporting a Zacks Rank of #2 (Buy), while EastGroup Properties has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CUZ likely has seen a stronger improvement to its earnings outlook than EGP has recently. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
CUZ currently has a forward P/E ratio of 8.83, while EGP has a forward P/E of 20.36. We also note that CUZ has a PEG ratio of 1.98. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EGP currently has a PEG ratio of 2.74.
Another notable valuation metric for CUZ is its P/B ratio of 0.89. 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, EGP has a P/B of 2.78.
Based on these metrics and many more, CUZ holds a Value grade of B, while EGP has a Value grade of D.
CUZ has seen stronger estimate revision activity and sports more attractive valuation metrics than EGP, so it seems like value investors will conclude that CUZ is the superior option right now.
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EastGroup Properties, Inc. (EGP) : 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.
