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RLJ vs. BDN: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either RLJ Lodging (RLJ) or Brandywine Realty Trust (BDN). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, RLJ Lodging has a Zacks Rank of #2 (Buy), while Brandywine Realty 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 RLJ is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

RLJ currently has a forward P/E ratio of 8.49, while BDN has a forward P/E of 10.56. We also note that RLJ has a PEG ratio of 1.70. 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. BDN currently has a PEG ratio of 4.02.

Another notable valuation metric for RLJ is its P/B ratio of 1.09. 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, BDN has a P/B of 1.48.

These are just a few of the metrics contributing to RLJ's Value grade of B and BDN's Value grade of D.

RLJ 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 RLJ is likely the superior value option right now.


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RLJ Lodging Trust (RLJ) : Free Stock Analysis Report
 
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