OPI vs. RPT: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the REIT and Equity Trust - Residential sector have probably already heard of Office Properties Income Trust (OPI) and RPT Realty (RPT). 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.
Right now, Office Properties Income Trust is sporting a Zacks Rank of #1 (Strong Buy), while RPT Realty has a Zacks Rank of #4 (Sell). This means that OPI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
OPI currently has a forward P/E ratio of 1.07, while RPT has a forward P/E of 10.49. We also note that OPI has a PEG ratio of 0.09. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RPT currently has a PEG ratio of 2.63.
Another notable valuation metric for OPI is its P/B ratio of 0.16. 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, RPT has a P/B of 1.04.
Based on these metrics and many more, OPI holds a Value grade of A, while RPT has a Value grade of C.
OPI 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 OPI is likely the superior value option right now.
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Office Properties Income Trust (OPI) : Free Stock Analysis Report
RPT Realty (RPT) : Free Stock Analysis Report
