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GEO or DLR: Which Is the Better Value Stock Right Now?

Zacks Equity Research
In the latest trading session, Electronic Arts (EA) closed at $87.50, marking a -1.89% move from the previous day.

Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Geo Group (GEO) and Digital Realty Trust (DLR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Right now, Geo Group is sporting a Zacks Rank of #1 (Strong Buy), while Digital Realty Trust has a Zacks Rank of #3 (Hold). This means that GEO'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 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

GEO currently has a forward P/E ratio of 8.14, while DLR has a forward P/E of 17.86. We also note that GEO has a PEG ratio of 1.36. 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. DLR currently has a PEG ratio of 2.58.

Another notable valuation metric for GEO is its P/B ratio of 2.56. 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, DLR has a P/B of 2.60.

These metrics, and several others, help GEO earn a Value grade of A, while DLR has been given a Value grade of D.

GEO stands above DLR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GEO is the superior value option right now.


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Geo Group Inc (The) (GEO) : Free Stock Analysis Report
 
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