Investors interested in REIT and Equity Trust - Residential stocks are likely familiar with Centerspace (CSR) and American Homes 4 Rent (AMH). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Currently, both Centerspace and American Homes 4 Rent are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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 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.
CSR currently has a forward P/E ratio of 14.42, while AMH has a forward P/E of 21.49. We also note that CSR has a PEG ratio of 2.06. 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. AMH currently has a PEG ratio of 3.15.
Another notable valuation metric for CSR is its P/B ratio of 1.32. 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, AMH has a P/B of 1.80.
These are just a few of the metrics contributing to CSR's Value grade of B and AMH's Value grade of D.
Both CSR and AMH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CSR is the superior value option right now.
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American Homes 4 Rent (AMH) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
