Investors interested in stocks from the Real Estate - Operations sector have probably already heard of TPG RE Finance Trust (TRTX) and FirstService (FSV). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, TPG RE Finance Trust is sporting a Zacks Rank of #2 (Buy), while FirstService has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that TRTX likely has seen a stronger improvement to its earnings outlook than FSV has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
TRTX currently has a forward P/E ratio of 9.04, while FSV has a forward P/E of 27.33. We also note that TRTX has a PEG ratio of 1.95. 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. FSV currently has a PEG ratio of 2.73.
Another notable valuation metric for TRTX is its P/B ratio of 0.66. 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, FSV has a P/B of 5.34.
These metrics, and several others, help TRTX earn a Value grade of B, while FSV has been given a Value grade of C.
TRTX sticks out from FSV in both our Zacks Rank and Style Scores models, so value investors will likely feel that TRTX is the better option right now.
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TPG RE Finance Trust, Inc. (TRTX): Free Stock Analysis Report FirstService Corporation (FSV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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