NXRT or ESS: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the REIT and Equity Trust - Residential sector have probably already heard of NexPoint Residential Trust Inc. (NXRT) and Essex Property Trust (ESS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, NexPoint Residential Trust Inc. has a Zacks Rank of #2 (Buy), while Essex Property Trust 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 NXRT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NXRT currently has a forward P/E ratio of 10.30, while ESS has a forward P/E of 14.92. We also note that NXRT has a PEG ratio of 1.29. 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. ESS currently has a PEG ratio of 2.33.
Another notable valuation metric for NXRT is its P/B ratio of 1.85. 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, ESS has a P/B of 2.49.
Based on these metrics and many more, NXRT holds a Value grade of B, while ESS has a Value grade of D.
NXRT sticks out from ESS in both our Zacks Rank and Style Scores models, so value investors will likely feel that NXRT is the better option right now.
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NexPoint Residential Trust, Inc. (NXRT) : Free Stock Analysis Report
Essex Property Trust, Inc. (ESS) : Free Stock Analysis Report
