ESRT vs. CUBE: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either Empire State Realty Trust (ESRT) or CubeSmart (CUBE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Empire State Realty Trust and CubeSmart are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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.
ESRT currently has a forward P/E ratio of 19.83, while CUBE has a forward P/E of 25.41. We also note that ESRT has a PEG ratio of 2.93. 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. CUBE currently has a PEG ratio of 5.08.
Another notable valuation metric for ESRT is its P/B ratio of 1.19. 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, CUBE has a P/B of 5.13.
Based on these metrics and many more, ESRT holds a Value grade of B, while CUBE has a Value grade of D.
Both ESRT and CUBE 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
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