Investors looking for stocks in the Real Estate - Operations sector might want to consider either PennyMac Mortgage (PMT) or Invitation Home (INVH). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Currently, PennyMac Mortgage has a Zacks Rank of #1 (Strong Buy), while Invitation Home 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 PMT 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PMT currently has a forward P/E ratio of 11.77, while INVH has a forward P/E of 19.57. We also note that PMT has a PEG ratio of 2.35. 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. INVH currently has a PEG ratio of 3.33.
Another notable valuation metric for PMT is its P/B ratio of 1. 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 1.51.
These are just a few of the metrics contributing to PMT's Value grade of B and INVH's Value grade of F.
PMT sticks out from INVH in both our Zacks Rank and Style Scores models, so value investors will likely feel that PMT is the better option right now.
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PennyMac Mortgage Investment Trust (PMT) : Free Stock Analysis Report
Invitation Home Inc. (INVH) : Free Stock Analysis Report
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