Investors interested in stocks from the REIT and Equity Trust - Retail sector have probably already heard of Phillips Edison & Company, Inc. (PECO) and Regency Centers (REG). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Phillips Edison & Company, Inc. and Regency Centers are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PECO likely has seen a stronger improvement to its earnings outlook than REG has recently. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PECO currently has a forward P/E ratio of 13.87, while REG has a forward P/E of 15.09. We also note that PECO has a PEG ratio of 1.50. 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. REG currently has a PEG ratio of 2.71.
Another notable valuation metric for PECO is its P/B ratio of 1.75. 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, REG has a P/B of 1.85.
These are just a few of the metrics contributing to PECO's Value grade of B and REG's Value grade of D.
PECO has seen stronger estimate revision activity and sports more attractive valuation metrics than REG, so it seems like value investors will conclude that PECO is the superior option right now.
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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.
