Investors interested in REIT and Equity Trust - Other stocks are likely familiar with DiamondRock Hospitality (DRH) and Getty Realty (GTY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
DiamondRock Hospitality and Getty Realty are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that DRH likely has seen a stronger improvement to its earnings outlook than GTY has recently. 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.
DRH currently has a forward P/E ratio of 10.34, while GTY has a forward P/E of 14.99. We also note that DRH has a PEG ratio of 2.97. 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. GTY currently has a PEG ratio of 8.72.
Another notable valuation metric for DRH is its P/B ratio of 1.10. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GTY has a P/B of 1.95.
Based on these metrics and many more, DRH holds a Value grade of B, while GTY has a Value grade of D.
DRH stands above GTY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DRH is the superior value option right now.
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Diamondrock Hospitality Company (DRH) : Free Stock Analysis Report
Getty Realty Corporation (GTY) : Free Stock Analysis Report
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