Investors with an interest in Real Estate - Operations stocks have likely encountered both CBRE Group (CBRE - Free Report) and RE/MAX (RMAX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, CBRE Group is sporting a Zacks Rank of #2 (Buy), while RE/MAX has a Zacks Rank of #3 (Hold). This means that CBRE'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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CBRE currently has a forward P/E ratio of 15.26, while RMAX has a forward P/E of 21.78. We also note that CBRE has a PEG ratio of 1.17. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RMAX currently has a PEG ratio of 3.11.
Another notable valuation metric for CBRE is its P/B ratio of 3.61. 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, RMAX has a P/B of 14.60.
These are just a few of the metrics contributing to CBRE's Value grade of B and RMAX's Value grade of C.
CBRE has seen stronger estimate revision activity and sports more attractive valuation metrics than RMAX, so it seems like value investors will conclude that CBRE is the superior option right now.