Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Senior Housing Properties (SNH - Free Report) and Lexington Realty (LXP - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Senior Housing Properties and Lexington Realty are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
SNH currently has a forward P/E ratio of 8.28, while LXP has a forward P/E of 12.15. We also note that SNH has a PEG ratio of 2.76. 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. LXP currently has a PEG ratio of 4.99.
Another notable valuation metric for SNH is its P/B ratio of 0.98. 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, LXP has a P/B of 1.75.
These metrics, and several others, help SNH earn a Value grade of B, while LXP has been given a Value grade of C.
Both SNH and LXP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SNH is the superior value option right now.