RLJ vs. OHI: Which Stock Is the Better Value Option?
Investors interested in REIT and Equity Trust - Other stocks are likely familiar with RLJ Lodging (RLJ) 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, RLJ Lodging is sporting a Zacks Rank of #2 (Buy), while Omega Healthcare Investors has a Zacks Rank of #4 (Sell). This means that RLJ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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 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.
RLJ currently has a forward P/E ratio of 7.08, while OHI has a forward P/E of 11.13. We also note that RLJ has a PEG ratio of 0.83. 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 9.44.
Another notable valuation metric for RLJ is its P/B ratio of 0.92. 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, OHI has a P/B of 2.04.
These metrics, and several others, help RLJ earn a Value grade of A, while OHI has been given a Value grade of D.
RLJ 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 RLJ is likely the superior value option right now.
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RLJ Lodging Trust (RLJ) : Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
