ESRT or SHO: Which Is the Better Value Stock Right Now?
Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Empire State Realty Trust (ESRT) and Sunstone Hotel Investors (SHO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Empire State Realty Trust and Sunstone Hotel Investors are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ESRT is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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 10.60, while SHO has a forward P/E of 13.40. We also note that ESRT has a PEG ratio of 3.62. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SHO currently has a PEG ratio of 6.39.
Another notable valuation metric for ESRT is its P/B ratio of 0.93. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SHO has a P/B of 1.21.
Based on these metrics and many more, ESRT holds a Value grade of B, while SHO has a Value grade of C.
ESRT sticks out from SHO in both our Zacks Rank and Style Scores models, so value investors will likely feel that ESRT is the better option right now.
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Empire State Realty Trust, Inc. (ESRT) : Free Stock Analysis Report
Sunstone Hotel Investors, Inc. (SHO) : Free Stock Analysis Report
