ARI or LADR: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the REIT and Equity Trust sector might want to consider either Apollo Commerical Finance (ARI) or Ladder Capital (LADR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Apollo Commerical Finance has a Zacks Rank of #2 (Buy), while Ladder Capital has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ARI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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 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.

ARI currently has a forward P/E ratio of 8.95, while LADR has a forward P/E of 9.96. We also note that ARI has a PEG ratio of 0.25. 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. LADR currently has a PEG ratio of 6.11.

Another notable valuation metric for ARI is its P/B ratio of 0.75. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LADR has a P/B of 0.95.

Based on these metrics and many more, ARI holds a Value grade of B, while LADR has a Value grade of C.

ARI stands above LADR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ARI is the superior value option right now.

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

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