Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Vornado (VNO) and Extra Space Storage (EXR). 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.
Currently, Vornado has a Zacks Rank of #2 (Buy), while Extra Space Storage has a Zacks Rank of #3 (Hold). This means that VNO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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.
VNO currently has a forward P/E ratio of 16.68, while EXR has a forward P/E of 18.23. We also note that VNO has a PEG ratio of 1.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EXR currently has a PEG ratio of 4.88.
Another notable valuation metric for VNO is its P/B ratio of 1.47. 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, EXR has a P/B of 2.23.
These are just a few of the metrics contributing to VNO's Value grade of A and EXR's Value grade of C.
VNO stands above EXR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VNO is the superior value option right now.
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Extra Space Storage Inc (EXR) : 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.
