Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Braemar Hotels & Resorts (BHR). BHR is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 5.41. This compares to its industry's average Forward P/E of 15.75. Over the last 12 months, BHR's Forward P/E has been as high as 7.43 and as low as 3.52, with a median of 5.41.
Another valuation metric that we should highlight is BHR's P/B ratio of 0.71. 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. BHR's current P/B looks attractive when compared to its industry's average P/B of 1.80. BHR's P/B has been as high as 0.94 and as low as 0.53, with a median of 0.74, over the past year.
Investors could also keep in mind City Office REIT (CIO), another REIT and Equity Trust - Other stock with a Zacks Rank of #2 (Buy) and Value grade of A.
City Office REIT is currently trading with a Forward P/E ratio of 4.87 while its PEG ratio sits at 0.81. Both of the company's metrics compare favorably to its industry's average P/E of 15.75 and average PEG ratio of 2.06.
Over the last 12 months, CIO's P/E has been as high as 5.62, as low as 3.86, with a median of 4.72, and its PEG ratio has been as high as 0.94, as low as 0.64, with a median of 0.79.
City Office REIT sports a P/B ratio of 0.36 as well; this compares to its industry's price-to-book ratio of 1.80. In the past 52 weeks, CIO's P/B has been as high as 0.39, as low as 0.28, with a median of 0.34.
Value investors will likely look at more than just these metrics, but the above data helps show that Braemar Hotels & Resorts and City Office REIT are likely undervalued currently. And when considering the strength of its earnings outlook, BHR and CIO sticks out as one of the market's strongest value stocks.
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BRAEMAR HOTELS & RESORTS INC. (BHR): Free Stock Analysis Report City Office REIT, Inc. (CIO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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