Investors looking for stocks in the REIT and Equity Trust - Retail sector might want to consider either Phillips Edison & Company, Inc. (PECO) or Regency Centers (REG). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Phillips Edison & Company, Inc. and Regency Centers are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
PECO currently has a forward P/E ratio of 13.26, while REG has a forward P/E of 14.96. We also note that PECO has a PEG ratio of 1.90. 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. REG currently has a PEG ratio of 4.32.
Another notable valuation metric for PECO is its P/B ratio of 1.77. 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, REG has a P/B of 1.92.
These metrics, and several others, help PECO earn a Value grade of B, while REG has been given a Value grade of D.
Both PECO and REG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PECO is the superior value option right now.
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Phillips Edison & Company, Inc. (PECO): Free Stock Analysis Report
Regency Centers Corporation (REG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).