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HT or BDN: Which Is the Better Value Stock Right Now?

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Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Hersha Hospitality and Brandywine Realty Trust (BDN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Hersha Hospitality and Brandywine Realty Trust are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

HT currently has a forward P/E ratio of 10.26, while BDN has a forward P/E of 12.22. We also note that HT has a PEG ratio of 1.88. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BDN currently has a PEG ratio of 2.20.

Another notable valuation metric for HT is its P/B ratio of 0.86. 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, BDN has a P/B of 1.60.

Based on these metrics and many more, HT holds a Value grade of B, while BDN has a Value grade of C.

HT has seen stronger estimate revision activity and sports more attractive valuation metrics than BDN, so it seems like value investors will conclude that HT is the superior option right now.


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