HPP or CUBE: Which Is the Better Value Stock Right Now?
Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Hudson Pacific Properties (HPP) and CubeSmart (CUBE). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Hudson Pacific Properties has a Zacks Rank of #1 (Strong Buy), while CubeSmart has a Zacks Rank of #3 (Hold) right now. This means that HPP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
HPP currently has a forward P/E ratio of 12.55, while CUBE has a forward P/E of 16.10. We also note that HPP has a PEG ratio of 1.06. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CUBE currently has a PEG ratio of 6.81.
Another notable valuation metric for HPP is its P/B ratio of 0.29. 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, CUBE has a P/B of 3.6.
These are just a few of the metrics contributing to HPP's Value grade of A and CUBE's Value grade of D.
HPP has seen stronger estimate revision activity and sports more attractive valuation metrics than CUBE, so it seems like value investors will conclude that HPP is the superior option right now.
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Free: See Our Top Stock And 4 Runners UpHudson Pacific Properties, Inc. (HPP) : Free Stock Analysis Report
CubeSmart (CUBE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
