Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either Empire State Realty Trust (ESRT) or Getty Realty (GTY). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Empire State Realty Trust and Getty Realty are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
ESRT currently has a forward P/E ratio of 10.70, while GTY has a forward P/E of 13.88. We also note that ESRT has a PEG ratio of 1.32. 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. GTY currently has a PEG ratio of 2.41.
Another notable valuation metric for ESRT is its P/B ratio of 0.83. 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, GTY has a P/B of 1.73.
These metrics, and several others, help ESRT earn a Value grade of B, while GTY has been given a Value grade of D.
Both ESRT and GTY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ESRT is the superior value option right now.
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Empire State Realty Trust, Inc. (ESRT) : Free Stock Analysis Report
Getty Realty Corporation (GTY) : Free Stock Analysis Report
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