ESRT or EGP: Which Is the Better Value Stock Right Now?
Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Empire State Realty Trust (ESRT) and EastGroup Properties (EGP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Empire State Realty Trust has a Zacks Rank of #2 (Buy), while EastGroup Properties has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ESRT is likely seeing its earnings outlook improve to a greater extent. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ESRT currently has a forward P/E ratio of 7.62, while EGP has a forward P/E of 22.12. We also note that ESRT has a PEG ratio of 2.54. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EGP currently has a PEG ratio of 3.84.
Another notable valuation metric for ESRT is its P/B ratio of 0.62. 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, EGP has a P/B of 3.67.
These metrics, and several others, help ESRT earn a Value grade of A, while EGP has been given a Value grade of F.
ESRT has seen stronger estimate revision activity and sports more attractive valuation metrics than EGP, so it seems like value investors will conclude that ESRT is the superior option right now.
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Empire State Realty Trust, Inc. (ESRT) : Free Stock Analysis Report
EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
