Investors interested in stocks from the REIT and Equity Trust - Retail sector have probably already heard of Phillips Edison & Company, Inc. (PECO) and Tanger (SKT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Currently, Phillips Edison & Company, Inc. has a Zacks Rank of #2 (Buy), while Tanger has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PECO likely has seen a stronger improvement to its earnings outlook than SKT has recently. 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.
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.
PECO currently has a forward P/E ratio of 13.56, while SKT has a forward P/E of 14.72. We also note that PECO has a PEG ratio of 1.51. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SKT currently has a PEG ratio of 2.03.
Another notable valuation metric for PECO is its P/B ratio of 1.71. 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, SKT has a P/B of 5.19.
These are just a few of the metrics contributing to PECO's Value grade of B and SKT's Value grade of C.
PECO sticks out from SKT in both our Zacks Rank and Style Scores models, so value investors will likely feel that PECO is the better option right now.
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Tanger Inc. (SKT) : 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.
