PECO or REG: Which Is the Better Value Stock Right Now?

Investors with an interest in REIT and Equity Trust - Retail stocks have likely encountered both Phillips Edison & Company, Inc. (PECO) and Regency Centers (REG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Phillips Edison & Company, Inc. and Regency Centers are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PECO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

PECO currently has a forward P/E ratio of 13.68, while REG has a forward P/E of 15.46. We also note that PECO has a PEG ratio of 1.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. REG currently has a PEG ratio of 2.78.

Another notable valuation metric for PECO is its P/B ratio of 1.72. 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, REG has a P/B of 1.89.

Based on these metrics and many more, PECO holds a Value grade of B, while REG has a Value grade of D.

PECO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PECO is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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