HST vs. CUBE: Which Stock Should Value Investors Buy Now?

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Host Hotels (HST) and CubeSmart (CUBE). But which of these two companies is the best option for those looking for undervalued stocks? 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.

Currently, Host Hotels has a Zacks Rank of #2 (Buy), while CubeSmart 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 HST is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

HST currently has a forward P/E ratio of 11.37, while CUBE has a forward P/E of 15.34. We also note that HST has a PEG ratio of 2.79. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CUBE currently has a PEG ratio of 6.65.

Another notable valuation metric for HST is its P/B ratio of 2.66. 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, CUBE has a P/B of 3.41.

These are just a few of the metrics contributing to HST's Value grade of B and CUBE's Value grade of D.

HST stands above CUBE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HST is the superior value option right now.

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

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