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Should Value Investors Buy Sotherly Hotels (SOHO) Stock?

Zacks Equity Research
The Macerich Company (MAC) opens Scottsdale Fashion Square's refurbished luxury wing. The face-lift enables the mall to add an impressive tenant lineup to its roster.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Sotherly Hotels (SOHO). SOHO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 6.46, which compares to its industry's average of 15.10. SOHO's Forward P/E has been as high as 7.05 and as low as 5.14, with a median of 6.45, all within the past year.

Another notable valuation metric for SOHO is its P/B ratio of 1.08. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.51. Over the past year, SOHO's P/B has been as high as 1.30 and as low as 0.87, with a median of 1.06.

Finally, our model also underscores that SOHO has a P/CF ratio of 4.42. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. SOHO's current P/CF looks attractive when compared to its industry's average P/CF of 15.52. Over the past 52 weeks, SOHO's P/CF has been as high as 5.21 and as low as 3.98, with a median of 4.62.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Sotherly Hotels is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SOHO feels like a great value stock at the moment.


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