Investors interested in stocks from the Real Estate - Operations sector have probably already heard of Jones Lang LaSalle (JLL - Free Report) and RE/MAX (RMAX - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Jones Lang LaSalle and RE/MAX are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that JLL has an improving earnings outlook. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
JLL currently has a forward P/E ratio of 13.49, while RMAX has a forward P/E of 14.72. We also note that JLL has a PEG ratio of 1.23. 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. RMAX currently has a PEG ratio of 2.10.
Another notable valuation metric for JLL is its P/B ratio of 1.83. 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, RMAX has a P/B of 8.25.
Based on these metrics and many more, JLL holds a Value grade of A, while RMAX has a Value grade of D.
JLL stands above RMAX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JLL is the superior value option right now.