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ESRT vs. WELL: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Empire State Realty Trust (ESRT) and Welltower (WELL). 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 has a Zacks Rank of #2 (Buy), while Welltower has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that ESRT likely has seen a stronger improvement to its earnings outlook than WELL has recently. But this is only part of the picture for value investors.

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 13.04, while WELL has a forward P/E of 17.81. We also note that ESRT has a PEG ratio of 3.96. 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. WELL currently has a PEG ratio of 4.45.

Another notable valuation metric for ESRT is its P/B ratio of 1.12. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WELL has a P/B of 1.87.

These metrics, and several others, help ESRT earn a Value grade of B, while WELL has been given a Value grade of F.

ESRT has seen stronger estimate revision activity and sports more attractive valuation metrics than WELL, so it seems like value investors will conclude that ESRT is the superior option right now.

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Empire State Realty Trust, Inc. (ESRT) : Free Stock Analysis Report
Welltower Inc. (WELL) : Free Stock Analysis Report
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