Investors interested in REIT and Equity Trust - Residential stocks are likely familiar with Safehold (SAFE) and American Homes 4 Rent (AMH). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Safehold and American Homes 4 Rent are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SAFE has an improving earnings outlook. However, value investors will care about much more than just this.
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.
SAFE currently has a forward P/E ratio of 9.71, while AMH has a forward P/E of 17.47. We also note that SAFE has a PEG ratio of 1.41. 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. AMH currently has a PEG ratio of 2.98.
Another notable valuation metric for SAFE is its P/B ratio of 0.47. 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, AMH has a P/B of 1.54.
These metrics, and several others, help SAFE earn a Value grade of A, while AMH has been given a Value grade of C.
SAFE stands above AMH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SAFE is the superior value option right now.
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Safehold Inc. (SAFE): Free Stock Analysis Report American Homes 4 Rent (AMH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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