PEB or GTY: Which Is the Better Value Stock Right Now?

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Pebblebrook Hotel (PEB) and Getty Realty (GTY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Pebblebrook Hotel has a Zacks Rank of #1 (Strong Buy), while Getty Realty has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that PEB likely has seen a stronger improvement to its earnings outlook than GTY has recently. But this is only part of the picture for value investors.

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 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.

PEB currently has a forward P/E ratio of 11.03, while GTY has a forward P/E of 12.89. We also note that PEB has a PEG ratio of 1.53. 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. GTY currently has a PEG ratio of 2.57.

Another notable valuation metric for PEB is its P/B ratio of 0.83. 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, GTY has a P/B of 1.84.

Based on these metrics and many more, PEB holds a Value grade of A, while GTY has a Value grade of C.

PEB has seen stronger estimate revision activity and sports more attractive valuation metrics than GTY, so it seems like value investors will conclude that PEB is the superior option right now.

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

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