RLJ vs. OHI: Which Stock Should Value Investors Buy Now?
Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both RLJ Lodging (RLJ) and Omega Healthcare Investors (OHI). 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, RLJ Lodging has a Zacks Rank of #2 (Buy), while Omega Healthcare Investors has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RLJ is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
RLJ currently has a forward P/E ratio of 6.85, while OHI has a forward P/E of 9.94. We also note that RLJ has a PEG ratio of 0.80. 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. OHI currently has a PEG ratio of 9.47.
Another notable valuation metric for RLJ is its P/B ratio of 0.89. 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 1.77.
These metrics, and several others, help RLJ earn a Value grade of A, while OHI has been given a Value grade of D.
RLJ sticks out from OHI in both our Zacks Rank and Style Scores models, so value investors will likely feel that RLJ is the better option right now.
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RLJ Lodging Trust (RLJ) : Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
