Investors interested in REIT and Equity Trust - Residential stocks are likely familiar with Modiv Industrial, Inc. (MDV) and Essex Property Trust (ESS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Currently, Modiv Industrial, Inc. has a Zacks Rank of #1 (Strong Buy), while Essex Property Trust has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MDV has an improving earnings outlook. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
MDV currently has a forward P/E ratio of 11.31, while ESS has a forward P/E of 16.30. We also note that MDV has a PEG ratio of 2.26. 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. ESS currently has a PEG ratio of 2.85.
Another notable valuation metric for MDV is its P/B ratio of 0.47. 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, ESS has a P/B of 2.76.
These metrics, and several others, help MDV earn a Value grade of B, while ESS has been given a Value grade of D.
MDV 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 MDV is likely the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
