Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Outfront Media (OUT) and Digital Realty Trust (DLR). 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.
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 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.
Outfront Media has a Zacks Rank of #2 (Buy), while Digital Realty Trust has a Zacks Rank of #3 (Hold) right now. This means that OUT'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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
OUT currently has a forward P/E ratio of 9.27, while DLR has a forward P/E of 17.33. We also note that OUT has a PEG ratio of 1.26. 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. DLR currently has a PEG ratio of 2.31.
Another notable valuation metric for OUT is its P/B ratio of 2.40. 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, DLR has a P/B of 2.48.
These are just a few of the metrics contributing to OUT's Value grade of A and DLR's Value grade of D.
OUT 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 OUT is likely the superior value option right now.