Zacks Investment Research | Dec 05, 2019 09:55PM ET
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put, Bluerock Residential Growth REIT, Inc. (NYSE:BRG) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Bluerock Residential Growth has a trailing twelve months PE ratio of 15.51, as you can see in the chart below:
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Bluerock Residential Growth has a P/S ratio of about 1.34. This is somewhat lower than the S&P 500 average, which comes in at 3.35 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Bluerock Residential Growth currently has a Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes BRG a solid choice for value investors, and some of its other metrics make it clear too.
Its P/CF ratio (another great indicator of value) comes in at 12.11, which is noticeably better than the industry average of 17.94. Clearly, BRG is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Bluerock Residential Growth might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of C and a Momentum score of C. This gives BRG a VGM score—or its overarching fundamental grade—of B.(You can read more about the Zacks Style Scores Bluerock Residential Growth REIT, Inc. Quote
Despite this positive trend, the stock has a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term.
Bottom Line
Bluerock Residential Growth is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 31% out of more than 250 industries) further supports the growth potential of the stock. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
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