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SKT or FRT: Which Is the Better Value Stock Right Now?

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Investors with an interest in REIT and Equity Trust - Retail stocks have likely encountered both Tanger Factory Outlet (SKT - Free Report) and Federal Realty Investment Trust (FRT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Tanger Factory Outlet and Federal Realty Investment Trust are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SKT currently has a forward P/E ratio of 9.45, while FRT has a forward P/E of 19.72. We also note that SKT has a PEG ratio of 2.43. 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. FRT currently has a PEG ratio of 3.64.

Another notable valuation metric for SKT is its P/B ratio of 3.35. 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, FRT has a P/B of 3.60.

These metrics, and several others, help SKT earn a Value grade of B, while FRT has been given a Value grade of D.

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


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