Investors interested in stocks from the REIT and Equity Trust - Residential sector have probably already heard of Armada Hoffler Properties (AHH) and Sun Communities (SUI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Armada Hoffler Properties and Sun Communities are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
AHH currently has a forward P/E ratio of 9.18, while SUI has a forward P/E of 27.81. We also note that AHH has a PEG ratio of 1.33. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SUI currently has a PEG ratio of 3.71.
Another notable valuation metric for AHH is its P/B ratio of 0.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SUI has a P/B of 3.39.
Based on these metrics and many more, AHH holds a Value grade of B, while SUI has a Value grade of D.
Both AHH and SUI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AHH is the superior value option right now.
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Armada Hoffler Properties, Inc. (AHH) : Free Stock Analysis Report
Sun Communities, Inc. (SUI) : Free Stock Analysis Report
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