Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of 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.
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 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 Omega Healthcare Investors are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CIO 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 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 7.18, while OHI has a forward P/E of 9.45. We also note that CIO has a PEG ratio of 1.20. 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. OHI currently has a PEG ratio of 5.83.
Another notable valuation metric for CIO is its P/B ratio of 0.63. 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 1.61.
These are just a few of the metrics contributing to CIO's Value grade of A and OHI's Value grade of C.
CIO sticks out from OHI 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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