Investors looking for stocks in the REIT and Equity Trust - Retail sector might want to consider either Phillips Edison & Company, Inc. (PECO) or Tanger (SKT). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Both Phillips Edison & Company, Inc. and Tanger have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PECO currently has a forward P/E ratio of 12.92, while SKT has a forward P/E of 13.88. We also note that PECO has a PEG ratio of 1.39. 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. SKT currently has a PEG ratio of 1.86.
Another notable valuation metric for PECO is its P/B ratio of 1.72. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SKT has a P/B of 5.18.
Based on these metrics and many more, PECO holds a Value grade of B, while SKT has a Value grade of C.
Both PECO and SKT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PECO is the superior value option right now.
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Phillips Edison & Company, Inc. (PECO): Free Stock Analysis Report Tanger Inc. (SKT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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