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PGRE or EGP: Which Is the Better Value Stock Right Now?
Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Paramount Group (PGRE - Free Report) and EastGroup Properties (EGP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Paramount Group is sporting a Zacks Rank of #2 (Buy), while EastGroup Properties has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PGRE likely has seen a stronger improvement to its earnings outlook than EGP has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
PGRE currently has a forward P/E ratio of 6.33, while EGP has a forward P/E of 22.23. We also note that PGRE has a PEG ratio of 0.24. 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. EGP currently has a PEG ratio of 2.76.
Another notable valuation metric for PGRE is its P/B ratio of 0.26. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, EGP has a P/B of 3.26.
Based on these metrics and many more, PGRE holds a Value grade of A, while EGP has a Value grade of F.
PGRE sticks out from EGP in both our Zacks Rank and Style Scores models, so value investors will likely feel that PGRE is the better option right now.