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APTS vs. AMH: Which Stock Should Value Investors Buy Now?

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·2 min read
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  • AMH-PF
  • APTS

Investors with an interest in REIT and Equity Trust - Residential stocks have likely encountered both Preferred Apartment Communities (APTS) and American Homes 4 Rent (AMH). 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Preferred Apartment Communities and American Homes 4 Rent are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

APTS currently has a forward P/E ratio of 13.24, while AMH has a forward P/E of 30.04. We also note that APTS has a PEG ratio of 1.89. 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. AMH currently has a PEG ratio of 2.93.

Another notable valuation metric for APTS is its P/B ratio of 0.67. 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, AMH has a P/B of 2.07.

These are just a few of the metrics contributing to APTS's Value grade of A and AMH's Value grade of D.

Both APTS and AMH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that APTS is the superior value option right now.


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Preferred Apartment Communities, Inc. (APTS) : Free Stock Analysis Report
 
American Homes 4 Rent (AMH) : Free Stock Analysis Report
 
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