SHO or STAG: Which Is the Better Value Stock Right Now?

SHO STAG

Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Sunstone Hotel Investors (SHO - Free Report) and Stag Industrial (STAG - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Sunstone Hotel Investors and Stag Industrial are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that SHO likely has seen a stronger improvement to its earnings outlook than STAG has recently. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

SHO currently has a forward P/E ratio of 12.11, while STAG has a forward P/E of 14.97. We also note that SHO has a PEG ratio of 4.04. 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. STAG currently has a PEG ratio of 5.02.

Another notable valuation metric for SHO is its P/B ratio of 1.13. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, STAG has a P/B of 1.88.

These are just a few of the metrics contributing to SHO's Value grade of B and STAG's Value grade of F.

SHO 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 SHO is likely the superior value option right now.

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