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Are Investors Undervaluing Hersha Hospitality (HT) Right Now?

Zacks Equity Research
BancorpSouth (BXS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Hersha Hospitality (HT). HT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 9.05, while its industry has an average P/E of 15.29. Over the past year, HT's Forward P/E has been as high as 10.08 and as low as 7.32, with a median of 8.54.

HT is also sporting a PEG ratio of 1.81. 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. HT's PEG compares to its industry's average PEG of 2.75. Over the past 52 weeks, HT's PEG has been as high as 2.54 and as low as 1.04, with a median of 1.84.

Investors should also recognize that HT has a P/B ratio of 0.86. 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. This stock's P/B looks attractive against its industry's average P/B of 2.54. Over the past year, HT's P/B has been as high as 0.95 and as low as 0.71, with a median of 0.83.

Finally, investors should note that HT has a P/CF ratio of 9.60. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.72. Over the past 52 weeks, HT's P/CF has been as high as 10.62 and as low as 3.67, with a median of 4.74.

Value investors will likely look at more than just these metrics, but the above data helps show that Hersha Hospitality is likely undervalued currently. And when considering the strength of its earnings outlook, HT sticks out at as one of the market's strongest value stocks.


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