Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Sunstone Hotel Investors (SHO) and National Health Investors (NHI). 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, Sunstone Hotel Investors has a Zacks Rank of #1 (Strong Buy), while National Health Investors has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that SHO likely has seen a stronger improvement to its earnings outlook than NHI has recently. However, value investors will care about much more than just this.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SHO currently has a forward P/E ratio of 12.67, while NHI has a forward P/E of 14.26. We also note that SHO has a PEG ratio of 2.59. 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. NHI currently has a PEG ratio of 3.77.
Another notable valuation metric for SHO is its P/B ratio of 1.32. 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, NHI has a P/B of 2.27.
Based on these metrics and many more, SHO holds a Value grade of B, while NHI has a Value grade of C.
SHO sticks out from NHI in both our Zacks Rank and Style Scores models, so value investors will likely feel that SHO is the better option right now.
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Sunstone Hotel Investors, Inc. (SHO): Free Stock Analysis Report
National Health Investors, Inc. (NHI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).