Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Kilroy Realty (KRC) and Getty Realty (GTY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Kilroy Realty is sporting a Zacks Rank of #2 (Buy), while Getty Realty has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that KRC likely has seen a stronger improvement to its earnings outlook than GTY has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
KRC currently has a forward P/E ratio of 6.67, while GTY has a forward P/E of 12.04. We also note that KRC has a PEG ratio of 5.91. 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. GTY currently has a PEG ratio of 8.03.
Another notable valuation metric for KRC is its P/B ratio of 0.62. 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, GTY has a P/B of 1.60.
These metrics, and several others, help KRC earn a Value grade of B, while GTY has been given a Value grade of D.
KRC stands above GTY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KRC is the superior value option right now.
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