Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Senior Housing Properties (SNH) and Highwoods Properties (HIW). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Senior Housing Properties is sporting a Zacks Rank of #2 (Buy), while Highwoods Properties has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SNH likely has seen a stronger improvement to its earnings outlook than HIW 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
SNH currently has a forward P/E ratio of 6.49, while HIW has a forward P/E of 12.87. We also note that SNH has a PEG ratio of 1.62. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HIW currently has a PEG ratio of 3.30.
Another notable valuation metric for SNH is its P/B ratio of 0.68. 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, HIW has a P/B of 2.05.
Based on these metrics and many more, SNH holds a Value grade of A, while HIW has a Value grade of C.
SNH 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 SNH is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Senior Housing Properties Trust (SNH) : Free Stock Analysis Report
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research