SRC or AMH: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the REIT and Equity Trust - Residential sector might want to consider either Spirit Realty (SRC) or American Homes 4 Rent (AMH). 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.
Right now, both Spirit Realty and American Homes 4 Rent are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
SRC currently has a forward P/E ratio of 9.34, while AMH has a forward P/E of 20.78. We also note that SRC has a PEG ratio of 0.58. 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. AMH currently has a PEG ratio of 2.74.
Another notable valuation metric for SRC 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, AMH has a P/B of 1.65.
These are just a few of the metrics contributing to SRC's Value grade of B and AMH's Value grade of D.
Both SRC and AMH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SRC is the superior value option right now.
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Spirit Realty Capital, Inc. (SRC) : Free Stock Analysis Report
American Homes 4 Rent (AMH) : Free Stock Analysis Report
