Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Vornado (VNO) and Extra Space Storage (EXR). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Vornado has a Zacks Rank of #2 (Buy), while Extra Space Storage 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 VNO 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.
VNO currently has a forward P/E ratio of 16.89, while EXR has a forward P/E of 17.95. We also note that VNO has a PEG ratio of 1.99. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EXR currently has a PEG ratio of 4.59.
Another notable valuation metric for VNO is its P/B ratio of 1.49. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, EXR has a P/B of 2.2.
These metrics, and several others, help VNO earn a Value grade of A, while EXR has been given a Value grade of D.
VNO sticks out from EXR in both our Zacks Rank and Style Scores models, so value investors will likely feel that VNO is the better option right now.
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Vornado Realty Trust (VNO): Free Stock Analysis Report
Extra Space Storage Inc (EXR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).