Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Pebblebrook Hotel (PEB) and Sabra Healthcare (SBRA). But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Pebblebrook Hotel and Sabra Healthcare are holding a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
PEB currently has a forward P/E ratio of 10.95, while SBRA has a forward P/E of 12.17. We also note that PEB has a PEG ratio of 1.27. 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. SBRA currently has a PEG ratio of 1.41.
Another notable valuation metric for PEB is its P/B ratio of 0.9. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SBRA has a P/B of 1.77.
These are just a few of the metrics contributing to PEB's Value grade of A and SBRA's Value grade of C.
Both PEB and SBRA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PEB is the superior value option right now.
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Pebblebrook Hotel Trust (PEB) : Free Stock Analysis Report
Sabra Healthcare REIT, Inc. (SBRA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
