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Should Value Investors Buy Sotherly Hotels (SOHO) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Sotherly Hotels (SOHO) is a stock many investors are watching right now. SOHO is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 5.82, which compares to its industry's average of 15.48. SOHO's Forward P/E has been as high as 6.92 and as low as 4.96, with a median of 6.46, all within the past year.

Investors should also recognize that SOHO has a P/B ratio of 1.06. 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. SOHO's current P/B looks attractive when compared to its industry's average P/B of 2.33. Over the past year, SOHO's P/B has been as high as 1.16 and as low as 0.87, with a median of 1.05.

Finally, investors should note that SOHO has a P/CF ratio of 4.30. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.82. Over the past 52 weeks, SOHO's P/CF has been as high as 5.21 and as low as 3.67, with a median of 4.59.

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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