Investors interested in REIT and Equity Trust - Other stocks are likely familiar with City Office REIT (CIO) and Crown Castle (CCI). 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.
City Office REIT has a Zacks Rank of #2 (Buy), while Crown Castle has a Zacks Rank of #3 (Hold) right now. This means that CIO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
CIO currently has a forward P/E ratio of 2.88, while CCI has a forward P/E of 12.57. We also note that CIO has a PEG ratio of 0.48. 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. CCI currently has a PEG ratio of 2.21.
Another notable valuation metric for CIO is its P/B ratio of 0.23. 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, CCI has a P/B of 5.82.
Based on these metrics and many more, CIO holds a Value grade of A, while CCI has a Value grade of D.
CIO sticks out from CCI in both our Zacks Rank and Style Scores models, so value investors will likely feel that CIO is the better option right now.
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