Back to top

Image: Bigstock

RTL or MPW: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both The Necessity Retail and Medical Properties (MPW - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

The Necessity Retail has a Zacks Rank of #2 (Buy), while Medical Properties has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RTL has an improving earnings outlook. But this is only part of the picture for value investors.

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 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.

RTL currently has a forward P/E ratio of 6.73, while MPW has a forward P/E of 10.79. We also note that RTL has a PEG ratio of 1.12. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MPW currently has a PEG ratio of 1.65.

Another notable valuation metric for RTL is its P/B ratio of 0.53. 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, MPW has a P/B of 1.42.

These are just a few of the metrics contributing to RTL's Value grade of A and MPW's Value grade of C.

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


See More Zacks Research for These Tickers


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


Medical Properties Trust, Inc. (MPW) - free report >>

Published in