Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Paramount Group (NYSE:PGRE) and CubeSmart (CUBE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Paramount Group and CubeSmart are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PGRE has an improving earnings outlook. However, value investors will care about much more than just this.
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 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.
PGRE currently has a forward P/E ratio of 7.73, while CUBE has a forward P/E of 15.74. We also note that PGRE has a PEG ratio of 6.44. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CUBE currently has a PEG ratio of 9.96.
Another notable valuation metric for PGRE is its P/B ratio of 0.37. 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, CUBE has a P/B of 2.76.
These metrics, and several others, help PGRE earn a Value grade of B, while CUBE has been given a Value grade of F.
PGRE has seen stronger estimate revision activity and sports more attractive valuation metrics than CUBE, so it seems like value investors will conclude that PGRE is the superior option right now.
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Paramount Group, Inc. (PGRE): Free Stock Analysis Report
CubeSmart (CUBE): Free Stock Analysis Report
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