HST vs. CUBE: Which Stock Should Value Investors Buy Now?

Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either Host Hotels (HST) or CubeSmart (CUBE). 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Host Hotels and CubeSmart are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HST is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

HST currently has a forward P/E ratio of 11.94, while CUBE has a forward P/E of 16.48. We also note that HST has a PEG ratio of 2.88. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CUBE currently has a PEG ratio of 7.34.

Another notable valuation metric for HST is its P/B ratio of 2.57. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CUBE has a P/B of 3.6.

These metrics, and several others, help HST earn a Value grade of B, while CUBE has been given a Value grade of D.

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

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This article originally published on Zacks Investment Research (zacks.com).

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