Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Gaming and Leisure Properties (GLPI) and Public Storage (PSA). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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, Gaming and Leisure Properties has a Zacks Rank of #2 (Buy), while Public 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 GLPI is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
GLPI currently has a forward P/E ratio of 10.63, while PSA has a forward P/E of 19.10. We also note that GLPI has a PEG ratio of 1.84. 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. PSA currently has a PEG ratio of 4.35.
Another notable valuation metric for GLPI is its P/B ratio of 2.45. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PSA has a P/B of 11.44.
These metrics, and several others, help GLPI earn a Value grade of B, while PSA has been given a Value grade of D.
GLPI sticks out from PSA in both our Zacks Rank and Style Scores models, so value investors will likely feel that GLPI is the better option right now.
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Gaming and Leisure Properties, Inc. (GLPI): Free Stock Analysis Report
Public Storage (PSA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).