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CIO vs. HIW: Which Stock Is the Better Value Option?

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

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

City Office REIT and Highwoods Properties 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 HIW has recently. However, value investors will care about much more than just this.

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 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 11.34, while HIW has a forward P/E of 14.63. We also note that CIO has a PEG ratio of 1.26. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HIW currently has a PEG ratio of 4.91.

Another notable valuation metric for CIO is its P/B ratio of 1.69. 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, HIW has a P/B of 2.35.

These metrics, and several others, help CIO earn a Value grade of B, while HIW has been given a Value grade of C.

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
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
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