Back to top

Image: Bigstock

AHH vs. IRT: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in REIT and Equity Trust - Residential stocks have likely encountered both Armada Hoffler Properties (AHH - Free Report) and Independence Realty Trust (IRT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Right now, both Armada Hoffler Properties and Independence Realty Trust are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

AHH currently has a forward P/E ratio of 13.78, while IRT has a forward P/E of 29.54. We also note that AHH has a PEG ratio of 11.12. 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. IRT currently has a PEG ratio of 14.77.

Another notable valuation metric for AHH is its P/B ratio of 1.51. 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, IRT has a P/B of 3.39.

Based on these metrics and many more, AHH holds a Value grade of B, while IRT has a Value grade of D.

Both AHH and IRT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AHH is the superior value option right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Armada Hoffler Properties, Inc. (AHH) - free report >>

Independence Realty Trust, Inc. (IRT) - free report >>

Published in