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SNH vs. HIW: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Senior Housing Properties (SNH) and Highwoods Properties (HIW). 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Senior Housing Properties and Highwoods Properties are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SNH has an improving earnings outlook. 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.

SNH currently has a forward P/E ratio of 6.55, while HIW has a forward P/E of 13.53. We also note that SNH has a PEG ratio of 1.64. 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. HIW currently has a PEG ratio of 3.47.

Another notable valuation metric for SNH is its P/B ratio of 0.69. 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, HIW has a P/B of 2.14.

Based on these metrics and many more, SNH holds a Value grade of A, while HIW has a Value grade of C.

SNH stands above HIW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNH is the superior value option right now.


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Senior Housing Properties Trust (SNH) : Free Stock Analysis Report
 
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
 
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