Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both DiamondRock Hospitality (DRH) and CubeSmart (CUBE). But which of these two stocks presents investors with the better value opportunity right now? 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.

Currently, DiamondRock Hospitality has a Zacks Rank of #2 (Buy), while CubeSmart has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DRH has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

DRH currently has a forward P/E ratio of 8.74, while CUBE has a forward P/E of 15.87. We also note that DRH has a PEG ratio of 5.02. 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 11.75.

Another notable valuation metric for DRH is its P/B ratio of 1.13. 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, CUBE has a P/B of 3.44.

Based on these metrics and many more, DRH holds a Value grade of A, while CUBE has a Value grade of D.

DRH 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 DRH is likely the superior value option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

DiamondRock Hospitality Company (DRH) : Free Stock Analysis Report

CubeSmart (CUBE) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research