Investors interested in REIT and Equity Trust - Other stocks are likely familiar with MGM Growth Properties (MGP) and InfraREIT (HIFR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, MGM Growth Properties is sporting a Zacks Rank of #2 (Buy), while InfraREIT has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MGP is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
MGP currently has a forward P/E ratio of 13.69, while HIFR has a forward P/E of 15.10. We also note that MGP has a PEG ratio of 2.19. 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. HIFR currently has a PEG ratio of 3.02.
Another notable valuation metric for MGP is its P/B ratio of 0.38. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HIFR has a P/B of 1.01.
Based on these metrics and many more, MGP holds a Value grade of B, while HIFR has a Value grade of C.
MGP sticks out from HIFR in both our Zacks Rank and Style Scores models, so value investors will likely feel that MGP is the better option right now.
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MGM Growth Properties LLC (MGP) : Free Stock Analysis Report
InfraREIT, Inc. (HIFR) : Free Stock Analysis Report
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