Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Pebblebrook Hotel (PEB) and Lexington Realty (LXP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Pebblebrook Hotel and Lexington Realty are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PEB likely has seen a stronger improvement to its earnings outlook than LXP has recently. But this is just one piece of the puzzle for value investors.
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.
PEB currently has a forward P/E ratio of 10.42, while LXP has a forward P/E of 11.71. We also note that PEB has a PEG ratio of 2.08. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LXP currently has a PEG ratio of 13.01.
Another notable valuation metric for PEB is its P/B ratio of 0.98. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LXP has a P/B of 1.71.
Based on these metrics and many more, PEB holds a Value grade of B, while LXP has a Value grade of C.
PEB has seen stronger estimate revision activity and sports more attractive valuation metrics than LXP, so it seems like value investors will conclude that PEB is the superior option right now.
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Pebblebrook Hotel Trust (PEB) : Free Stock Analysis Report
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