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SKT vs. FRT: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the REIT and Equity Trust - Retail sector might want to consider either Tanger Factory Outlet (SKT - Free Report) or Federal Realty Investment Trust (FRT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

Both Tanger Factory Outlet and Federal Realty Investment Trust have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle 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.

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 9.42, while FRT has a forward P/E of 19.65. We also note that SKT has a PEG ratio of 1.13. 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 3.63.

Another notable valuation metric for SKT is its P/B ratio of 3.40. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FRT has a P/B of 3.62.

Based on these metrics and many more, SKT holds a Value grade of B, while FRT has a Value grade of F.

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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