Investors interested in REIT and Equity Trust - Other stocks are likely familiar with City Office REIT (CIO) and Omega Healthcare Investors (OHI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Both City Office REIT and Omega Healthcare Investors have 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 only part of the picture 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CIO currently has a forward P/E ratio of 4.24, while OHI has a forward P/E of 14.16. We also note that CIO has a PEG ratio of 0.71. 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. OHI currently has a PEG ratio of 1.19.
Another notable valuation metric for CIO is its P/B ratio of 0.31. 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, OHI has a P/B of 2.46.
These metrics, and several others, help CIO earn a Value grade of A, while OHI has been given a Value grade of C.
Both CIO and OHI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CIO is the superior value option right now.
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Free: See Our Top Stock And 4 Runners UpCity Office REIT, Inc. (CIO) : Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
