OPI or IRT: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the REIT and Equity Trust - Residential sector have probably already heard of Office Properties Income Trust (OPI) and Independence Realty Trust (IRT). 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.
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.
Currently, Office Properties Income Trust has a Zacks Rank of #2 (Buy), while Independence Realty Trust has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OPI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
OPI currently has a forward P/E ratio of 1.40, while IRT has a forward P/E of 13.86. We also note that OPI has a PEG ratio of 0.12. 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. IRT currently has a PEG ratio of 6.93.
Another notable valuation metric for OPI is its P/B ratio of 0.21. 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, IRT has a P/B of 0.97.
These are just a few of the metrics contributing to OPI's Value grade of A and IRT's Value grade of D.
OPI has seen stronger estimate revision activity and sports more attractive valuation metrics than IRT, so it seems like value investors will conclude that OPI is the superior option right now.
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Office Properties Income Trust (OPI) : Free Stock Analysis Report
Independence Realty Trust, Inc. (IRT) : Free Stock Analysis Report
