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SKT vs. EQIX: Which Stock Is the Better Value Option?
Investors interested in stocks from the REIT and Equity Trust - Retail sector have probably already heard of Tanger Factory Outlet (SKT - Free Report) and Equinix (EQIX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Tanger Factory Outlet has a Zacks Rank of #2 (Buy), while Equinix 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 SKT 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 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.
SKT currently has a forward P/E ratio of 9.07, while EQIX has a forward P/E of 23.12. We also note that SKT has a PEG ratio of 1.10. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EQIX currently has a PEG ratio of 2.50.
Another notable valuation metric for SKT is its P/B ratio of 3.25. 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, EQIX has a P/B of 5.75.
Based on these metrics and many more, SKT holds a Value grade of B, while EQIX has a Value grade of D.
SKT stands above EQIX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SKT is the superior value option right now.