Investors interested in Real Estate - Operations stocks are likely familiar with TPG RE Finance Trust (TRTX) and Corporacion Inmobiliaria Vesta, S.A.B. de C.V. Sponsored ADR (VTMX). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, TPG RE Finance Trust is sporting a Zacks Rank of #2 (Buy), while Corporacion Inmobiliaria Vesta, S.A.B. de C.V. Sponsored ADR has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TRTX has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
TRTX currently has a forward P/E ratio of 8.40, while VTMX has a forward P/E of 13.44. We also note that TRTX has a PEG ratio of 1.59. 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. VTMX currently has a PEG ratio of 3.05.
Another notable valuation metric for TRTX is its P/B ratio of 0.63. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, VTMX has a P/B of 1.
Based on these metrics and many more, TRTX holds a Value grade of B, while VTMX has a Value grade of C.
TRTX sticks out from VTMX in both our Zacks Rank and Style Scores models, so value investors will likely feel that TRTX is the better option right now.
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TPG RE Finance Trust, Inc. (TRTX): Free Stock Analysis Report
Corporacion Inmobiliaria Vesta, S.A.B. de C.V. Sponsored ADR (VTMX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).