Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Senior Housing Properties and Ventas (VTR - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Senior Housing Properties and Ventas are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SNH has an improving earnings outlook. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SNH currently has a forward P/E ratio of 7, while VTR has a forward P/E of 19.03. We also note that SNH has a PEG ratio of 1.75. 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. VTR currently has a PEG ratio of 7.10.
Another notable valuation metric for SNH is its P/B ratio of 0.73. 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, VTR has a P/B of 2.51.
Based on these metrics and many more, SNH holds a Value grade of A, while VTR has a Value grade of D.
SNH has seen stronger estimate revision activity and sports more attractive valuation metrics than VTR, so it seems like value investors will conclude that SNH is the superior option right now.