Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both City Office REIT (CIO) and EastGroup Properties (EGP). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, City Office REIT has a Zacks Rank of #2 (Buy), while EastGroup Properties 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 CIO has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CIO currently has a forward P/E ratio of 4.69, while EGP has a forward P/E of 19.77. We also note that CIO has a PEG ratio of 0.78. 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. EGP currently has a PEG ratio of 3.42.
Another notable valuation metric for CIO is its P/B ratio of 0.34. 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, EGP has a P/B of 2.65.
Based on these metrics and many more, CIO holds a Value grade of A, while EGP has a Value grade of D.
CIO stands above EGP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CIO is the superior value option right now.
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City Office REIT, Inc. (CIO): Free Stock Analysis Report EastGroup Properties, Inc. (EGP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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