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CIO vs. CTRE: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Ross Stores (ROST) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both City Office REIT (CIO) and CareTrust REIT (CTRE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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 and CareTrust REIT are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CIO likely has seen a stronger improvement to its earnings outlook than CTRE has recently. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CIO currently has a forward P/E ratio of 10.20, while CTRE has a forward P/E of 13.22. We also note that CIO has a PEG ratio of 1.13. 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. CTRE currently has a PEG ratio of 2.64.

Another notable valuation metric for CIO is its P/B ratio of 1.53. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CTRE has a P/B of 2.03.

These are just a few of the metrics contributing to CIO's Value grade of B and CTRE's Value grade of D.

CIO 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 CIO is likely the superior value option right now.

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City Office REIT, Inc. (CIO) : Free Stock Analysis Report
CareTrust REIT, Inc. (CTRE) : Free Stock Analysis Report
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