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 offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Right now, Apollo Commerical Finance is sporting a Zacks Rank of #2 (Buy), while Ladder Capital has a Zacks Rank of #4 (Sell). 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. However, value investors will care about much more than just this.
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 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.
ARI currently has a forward P/E ratio of 9.51, while LADR has a forward P/E of 10.78. We also note that ARI has a PEG ratio of 0.25. 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. LADR currently has a PEG ratio of 2.17.
Another notable valuation metric for ARI is its P/B ratio of 0.73. 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 0.88.
These metrics, and several others, help ARI earn a Value grade of B, while LADR has been given a Value grade of D.
ARI 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 ARI is likely the superior value option right now.
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Apollo Commercial Real Estate Finance (ARI): Free Stock Analysis Report Ladder Capital Corp (LADR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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