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AHT vs. LXP: Which Stock Should Value Investors Buy Now?

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Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Ashford Hospitality Trust (AHT - 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.

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, Ashford Hospitality Trust is sporting a Zacks Rank of #2 (Buy), while Lexington Realty has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AHT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

AHT currently has a forward P/E ratio of 3.83, while LXP has a forward P/E of 11.64. We also note that AHT has a PEG ratio of 0.77. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LXP currently has a PEG ratio of 10.91.

Another notable valuation metric for AHT is its P/B ratio of 1.05. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LXP has a P/B of 1.71.

These are just a few of the metrics contributing to AHT's Value grade of A and LXP's Value grade of C.

AHT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AHT is likely the superior value option right now.


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