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Is Piedmont Office (PDM) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Piedmont Office Realty Trust, Inc. (PDM - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Piedmont Office has a trailing twelve months PE ratio of 9.7, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, Piedmont Office Realty Trust’s current PE level puts it somewhat below its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 24.5. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Piedmont Office has a forward PE ratio (price relative to this year’s earnings) of just 9.5, which is lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for Piedmont Office Realty Trust stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Piedmont Office has a P/S ratio of about 4.4. This is somewhat lower than the S&P 500’s average of 5.1. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Piedmont Office currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Piedmont Office Realty Trust a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) comes in at 5.4, which is substantially better than the industry average of 16.3). Clearly, PDM is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Piedmont Office might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of D. This gives PDM a Zacks VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one upward and no downward revision in the past sixty days period, while the full year estimate has seen two upward revisions and no downward revisions in the same time period.
As a result, the consensus estimate for the current quarter has improved 2.1% and the full year has risen by 1.6%,in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Piedmont Office Realty Trust, Inc. Price and Consensus
The stock holds a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term. However, Piedmont Office is enjoying bullish analyst sentiment, as indicated by the positive estimate revisions, and this works in the company’s favor.
Bottom Line
Piedmont Office is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Also, the company’s prospects seem encouraging due to favorable broader factors, as it has a strong industry rank (top 37%). In fact, over the past year, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
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Is Piedmont Office (PDM) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Piedmont Office Realty Trust, Inc. (PDM - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Piedmont Office has a trailing twelve months PE ratio of 9.7, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, Piedmont Office Realty Trust’s current PE level puts it somewhat below its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 24.5. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Piedmont Office has a forward PE ratio (price relative to this year’s earnings) of just 9.5, which is lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for Piedmont Office Realty Trust stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Piedmont Office has a P/S ratio of about 4.4. This is somewhat lower than the S&P 500’s average of 5.1. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Piedmont Office currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Piedmont Office Realty Trust a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) comes in at 5.4, which is substantially better than the industry average of 16.3). Clearly, PDM is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Piedmont Office might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of D. This gives PDM a Zacks VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one upward and no downward revision in the past sixty days period, while the full year estimate has seen two upward revisions and no downward revisions in the same time period.
As a result, the consensus estimate for the current quarter has improved 2.1% and the full year has risen by 1.6%,in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Piedmont Office Realty Trust, Inc. Price and Consensus
Piedmont Office Realty Trust, Inc. price-consensus-chart | Piedmont Office Realty Trust, Inc. Quote
The stock holds a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term. However, Piedmont Office is enjoying bullish analyst sentiment, as indicated by the positive estimate revisions, and this works in the company’s favor.
Bottom Line
Piedmont Office is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Also, the company’s prospects seem encouraging due to favorable broader factors, as it has a strong industry rank (top 37%). In fact, over the past year, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.