VNO vs. PSA: Which Stock Is the Better Value Option?
Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Vornado (VNO) and Public Storage (PSA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Vornado is sporting a Zacks Rank of #2 (Buy), while Public Storage has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VNO likely has seen a stronger improvement to its earnings outlook than PSA has recently. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
VNO currently has a forward P/E ratio of 14.58, while PSA has a forward P/E of 17.41. We also note that VNO has a PEG ratio of 1.58. 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. PSA currently has a PEG ratio of 4.01.
Another notable valuation metric for VNO is its P/B ratio of 1.35. 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, PSA has a P/B of 10.48.
Based on these metrics and many more, VNO holds a Value grade of B, while PSA has a Value grade of D.
VNO has seen stronger estimate revision activity and sports more attractive valuation metrics than PSA, so it seems like value investors will conclude that VNO is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
