PECO or REG: Which Is the Better Value Stock Right Now?

Investors with an interest in REIT and Equity Trust - Retail stocks have likely encountered both Phillips Edison & Company, Inc. (PECO) and Regency Centers (REG). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 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.

Currently, Phillips Edison & Company, Inc. has a Zacks Rank of #2 (Buy), while Regency Centers has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PECO likely has seen a stronger improvement to its earnings outlook than REG has recently. But this is only part of the picture 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

PECO currently has a forward P/E ratio of 14.07, while REG has a forward P/E of 15.49. We also note that PECO has a PEG ratio of 2.02. 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. REG currently has a PEG ratio of 4.47.

Another notable valuation metric for PECO is its P/B ratio of 1.88. 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, REG has a P/B of 1.99.

Based on these metrics and many more, PECO holds a Value grade of B, while REG has a Value grade of D.

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

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This article originally published on Zacks Investment Research (zacks.com).

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