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LEGH or INVH: Which Is the Better Value Stock Right Now?

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Zacks Equity Research
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Investors looking for stocks in the Real Estate - Operations sector might want to consider either Legacy Housing (LEGH) or Invitation Home (INVH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Legacy Housing has a Zacks Rank of #2 (Buy), while Invitation Home has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LEGH likely has seen a stronger improvement to its earnings outlook than INVH has recently. 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.

LEGH currently has a forward P/E ratio of 11.18, while INVH has a forward P/E of 21.38. We also note that LEGH has a PEG ratio of 0.56. 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. INVH currently has a PEG ratio of 3.17.

Another notable valuation metric for LEGH is its P/B ratio of 1.50. 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, INVH has a P/B of 1.71.

These metrics, and several others, help LEGH earn a Value grade of A, while INVH has been given a Value grade of D.

LEGH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that LEGH is likely the superior value option right now.


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Legacy Housing Corporation (LEGH) : Free Stock Analysis Report
 
Invitation Home Inc. (INVH) : Free Stock Analysis Report
 
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Zacks Investment Research