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PMT or LMRK: Which Is the Better Value Stock Right Now?

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Investors with an interest in Real Estate - Operations stocks have likely encountered both PennyMac Mortgage (PMT - Free Report) and Landmark Infrastructure Partners . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

PennyMac Mortgage and Landmark Infrastructure Partners are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PMT is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

PMT currently has a forward P/E ratio of 10.96, while LMRK has a forward P/E of 30.11. We also note that PMT has a PEG ratio of 2.19. 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. LMRK currently has a PEG ratio of 6.02.

Another notable valuation metric for PMT is its P/B ratio of 1.02. 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, LMRK has a P/B of 1.70.

These metrics, and several others, help PMT earn a Value grade of B, while LMRK has been given a Value grade of C.

PMT sticks out from LMRK in both our Zacks Rank and Style Scores models, so value investors will likely feel that PMT is the better option right now.


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