Investors with an interest in Real Estate - Operations stocks have likely encountered both Legacy Housing (LEGH - Free Report) and Essential Properties Realty Trust, Inc. (EPRT - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Legacy Housing has a Zacks Rank of #2 (Buy), while Essential Properties Realty Trust, Inc. has a Zacks Rank of #3 (Hold) right now. This means that LEGH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
LEGH currently has a forward P/E ratio of 10.48, while EPRT has a forward P/E of 18.66. We also note that LEGH has a PEG ratio of 0.52. 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. EPRT currently has a PEG ratio of 1.94.
Another notable valuation metric for LEGH is its P/B ratio of 1.50. 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, EPRT has a P/B of 1.60.
Based on these metrics and many more, LEGH holds a Value grade of A, while EPRT has a Value grade of F.
LEGH 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 LEGH is likely the superior value option right now.