Investors interested in REIT and Equity Trust - Retail stocks are likely familiar with Tanger Factory Outlet (SKT) and Simon Property (SPG). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Tanger Factory Outlet and Simon Property are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that SKT likely has seen a stronger improvement to its earnings outlook than SPG has recently. 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.
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.
SKT currently has a forward P/E ratio of 8.53, while SPG has a forward P/E of 14.18. We also note that SKT has a PEG ratio of 1.68. 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. SPG currently has a PEG ratio of 2.39.
Another notable valuation metric for SKT is its P/B ratio of 3.75. 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, SPG has a P/B of 14.29.
Based on these metrics and many more, SKT holds a Value grade of B, while SPG has a Value grade of D.
SKT stands above SPG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SKT is the superior value option right now.
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Tanger Factory Outlet Centers, Inc. (SKT) : Free Stock Analysis Report
Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
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