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

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Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either Highwoods Properties (HIW - Free Report) or EastGroup Properties (EGP - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Highwoods Properties and EastGroup Properties are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle 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.

HIW currently has a forward P/E ratio of 12.32, while EGP has a forward P/E of 31.18. We also note that HIW has a PEG ratio of 3.22. 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. EGP currently has a PEG ratio of 4.21.

Another notable valuation metric for HIW is its P/B ratio of 2.04. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EGP has a P/B of 5.42.

These are just a few of the metrics contributing to HIW's Value grade of B and EGP's Value grade of D.

Both HIW and EGP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HIW is the superior value option right now.


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