Investors interested in stocks from the Real Estate – Operations sector have probably already heard of Kennedy-Wilson (KW) and Zillow (Z). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Kennedy-Wilson is sporting a Zacks Rank of #2 (Buy), while Zillow has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KW is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
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.
KW currently has a forward P/E ratio of 3.28, while Z has a forward P/E of 34.48. We also note that KW has a PEG ratio of 0.61. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. Z currently has a PEG ratio of 2.57.
Another notable valuation metric for KW is its P/B ratio of 1.59. 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, Z has a P/B of 3.71.
These are just a few of the metrics contributing to KW’s Value grade of B and Z’s Value grade of F.
KW stands above Z thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KW is the superior value option right now.
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Kennedy-Wilson Holdings Inc. (KW) : Free Stock Analysis Report
Zillow Group, Inc. (Z) : Free Stock Analysis Report
