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Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Outfront Media (OUT) and Digital Realty Trust (DLR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Outfront Media is sporting a Zacks Rank of #2 (Buy), while Digital Realty Trust has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OUT is likely seeing its earnings outlook improve to a greater extent. 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.
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.
OUT currently has a forward P/E ratio of 5.17, while DLR has a forward P/E of 18.69. We also note that OUT has a PEG ratio of 0.57. 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. DLR currently has a PEG ratio of 2.84.
Another notable valuation metric for OUT is its P/B ratio of 1.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, DLR has a P/B of 2.76.
Based on these metrics and many more, OUT holds a Value grade of B, while DLR has a Value grade of F.
OUT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that OUT is likely the superior value option right now.
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