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

Both Phillips Edison & Company, Inc. and Regency Centers have a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.

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.

PECO currently has a forward P/E ratio of 14.03, while REG has a forward P/E of 16.01. We also note that PECO has a PEG ratio of 0.98. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. REG currently has a PEG ratio of 2.87.

Another notable valuation metric for PECO is its P/B ratio of 1.86. 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, REG has a P/B of 2.03.

These metrics, and several others, help PECO earn a Value grade of B, while REG has been given a Value grade of D.

Both PECO and REG 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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This article originally published on Zacks Investment Research (zacks.com).

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