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BRX vs. O: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the REIT and Equity Trust - Retail sector have probably already heard of Brixmor Property (BRX - Free Report) and Realty Income Corp. (O - Free Report) . 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.

Brixmor Property has a Zacks Rank of #2 (Buy), while Realty Income Corp. has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BRX is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

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.

BRX currently has a forward P/E ratio of 9.76, while O has a forward P/E of 21.22. We also note that BRX has a PEG ratio of 2.17. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. O currently has a PEG ratio of 5.34.

Another notable valuation metric for BRX is its P/B ratio of 2. 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, O has a P/B of 2.49.

These are just a few of the metrics contributing to BRX's Value grade of B and O's Value grade of F.

BRX 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 BRX is likely the superior value option right now.


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Realty Income Corporation (O) - free report >>

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