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APTS vs. EDR: Which Stock Should Value Investors Buy Now?

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Investors with an interest in REIT and Equity Trust - Residential stocks have likely encountered both Preferred Apartment Communities and Education Realty Trust (EDR - Free Report) . 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.

Currently, Preferred Apartment Communities has a Zacks Rank of #2 (Buy), while Education Realty Trust has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that APTS has an improving earnings outlook. But this is only part of the picture 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.

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.

APTS currently has a forward P/E ratio of 10.40, while EDR has a forward P/E of 21.50. We also note that APTS has a PEG ratio of 1.49. 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. EDR currently has a PEG ratio of 4.37.

Another notable valuation metric for APTS is its P/B ratio of 0.44. 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, EDR has a P/B of 1.63.

Based on these metrics and many more, APTS holds a Value grade of A, while EDR has a Value grade of F.

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


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