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Is Empire State Realty Trust (ESRT) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Empire State Realty Trust (ESRT). ESRT is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 8.45, while its industry has an average P/E of 16.04. ESRT's Forward P/E has been as high as 17.98 and as low as 8.11, with a median of 12.77, all within the past year.

Investors will also notice that ESRT has a PEG ratio of 1.04. 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. ESRT's PEG compares to its industry's average PEG of 2.22. Within the past year, ESRT's PEG has been as high as 2.77 and as low as 1, with a median of 1.89.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ESRT has a P/S ratio of 1.79. This compares to its industry's average P/S of 5.14.

Finally, we should also recognize that ESRT has a P/CF ratio of 8.06. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.11. Over the past year, ESRT's P/CF has been as high as 18.59 and as low as 7.73, with a median of 12.86.

The Geo Group (GEO) may be another strong REIT and Equity Trust - Other stock to add to your shortlist. GEO is a # 2 (Buy) stock with a Value grade of A.

The Geo Group is currently trading with a Forward P/E ratio of 2.73 while its PEG ratio sits at 0.27. Both of the company's metrics compare favorably to its industry's average P/E of 16.04 and average PEG ratio of 2.22.

Over the last 12 months, GEO's P/E has been as high as 4.08, as low as 2.46, with a median of 3.13, and its PEG ratio has been as high as 0.41, as low as 0.25, with a median of 0.31.

The Geo Group also has a P/B ratio of 0.75 compared to its industry's price-to-book ratio of 2.24. Over the past year, its P/B ratio has been as high as 1.16, as low as 0.66, with a median of 0.88.

These are only a few of the key metrics included in Empire State Realty Trust and The Geo Group strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ESRT and GEO look like an impressive value stock at the moment.


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