Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Hersha Hospitality (HT - Free Report) and Brandywine Realty Trust (BDN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Hersha Hospitality and Brandywine Realty Trust are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This means that HT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
HT currently has a forward P/E ratio of 10.64, while BDN has a forward P/E of 12.40. We also note that HT has a PEG ratio of 2.14. 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. BDN currently has a PEG ratio of 2.24.
Another notable valuation metric for HT is its P/B ratio of 0.89. 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, BDN has a P/B of 1.62.
Based on these metrics and many more, HT holds a Value grade of B, while BDN has a Value grade of C.
HT sticks out from BDN in both our Zacks Rank and Style Scores models, so value investors will likely feel that HT is the better option right now.