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Is Paramount Group (PGRE) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Paramount Group (PGRE - Free Report) . PGRE is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 7.44, which compares to its industry's average of 17.25. PGRE's Forward P/E has been as high as 11.85 and as low as 7.21, with a median of 9.66, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PGRE has a P/S ratio of 2.16. This compares to its industry's average P/S of 5.08.
Finally, investors should note that PGRE has a P/CF ratio of 6.86. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.53. Over the past year, PGRE's P/CF has been as high as 11.25 and as low as 6.61, with a median of 9.27.
Service Properties Trust (SVC - Free Report) may be another strong REIT and Equity Trust - Other stock to add to your shortlist. SVC is a # 1 (Strong Buy) stock with a Value grade of A.
Additionally, Service Properties Trust has a P/B ratio of 0.86 while its industry's price-to-book ratio sits at 2.27. For SVC, this valuation metric has been as high as 1.13, as low as 0.56, with a median of 0.92 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Paramount Group and Service Properties Trust are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PGRE and SVC feels like a great value stock at the moment.