Back to top

Image: Bigstock

APTS or IRT: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the REIT and Equity Trust - Residential sector have probably already heard of Preferred Apartment Communities and Independence Realty Trust (IRT - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Preferred Apartment Communities and Independence Realty Trust are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that APTS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 16.72, while IRT has a forward P/E of 31.50. We also note that APTS has a PEG ratio of 2.39. 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. IRT currently has a PEG ratio of 15.75.

Another notable valuation metric for APTS is its P/B ratio of 0.89. 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, IRT has a P/B of 3.62.

These are just a few of the metrics contributing to APTS's Value grade of B and IRT's Value grade of D.

APTS sticks out from IRT in both our Zacks Rank and Style Scores models, so value investors will likely feel that APTS is the better option right now.


In-Depth Zacks Research for the Tickers Above


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


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

Published in