Investors interested in stocks from the REIT and Equity Trust - Retail sector have probably already heard of Brixmor Property (BRX) and Realty Income Corp. (O). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Brixmor Property has a Zacks Rank of #2 (Buy), while Realty Income Corp. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BRX has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
BRX currently has a forward P/E ratio of 9.52, while O has a forward P/E of 22.26. We also note that BRX has a PEG ratio of 2.12. 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. O currently has a PEG ratio of 6.06.
Another notable valuation metric for BRX is its P/B ratio of 1.95. 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, O has a P/B of 2.63.
These are just a few of the metrics contributing to BRX's Value grade of B and O's Value grade of F.
BRX stands above O thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BRX is the superior value option right now.
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Brixmor Property Group Inc. (BRX) : Free Stock Analysis Report
Realty Income Corporation (O) : Free Stock Analysis Report
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