Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Gladstone Commercial (GOOD) and Ryman Hospitality Properties (RHP). 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.
Currently, Gladstone Commercial has a Zacks Rank of #2 (Buy), while Ryman Hospitality Properties has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GOOD has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
GOOD currently has a forward P/E ratio of 11.25, while RHP has a forward P/E of 12.65. We also note that GOOD has a PEG ratio of 1.88. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RHP currently has a PEG ratio of 2.69.
Another notable valuation metric for GOOD is its P/B ratio of 4.05. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RHP has a P/B of 11.51.
Based on these metrics and many more, GOOD holds a Value grade of B, while RHP has a Value grade of C.
GOOD sticks out from RHP in both our Zacks Rank and Style Scores models, so value investors will likely feel that GOOD is the better option right now.
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