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DHC or VTR: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Diversified Healthcare (DHC) and Ventas (VTR). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Diversified Healthcare and Ventas 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 DHC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

DHC currently has a forward P/E ratio of 6.85, while VTR has a forward P/E of 15.61. We also note that DHC has a PEG ratio of 1.71. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. VTR currently has a PEG ratio of 6.62.

Another notable valuation metric for DHC is its P/B ratio of 0.62. 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, VTR has a P/B of 2.

These are just a few of the metrics contributing to DHC's Value grade of A and VTR's Value grade of D.

DHC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DHC is likely the superior value option right now.


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Senior Housing Properties Trust (DHC) : Free Stock Analysis Report
 
Ventas, Inc. (VTR) : Free Stock Analysis Report
 
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