Investors interested in REIT and Equity Trust - Other stocks are likely familiar with City Office REIT (CIO) and EastGroup Properties (EGP). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both City Office REIT and EastGroup Properties have a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
CIO currently has a forward P/E ratio of 6.21, while EGP has a forward P/E of 18.80. We also note that CIO has a PEG ratio of 1.03. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EGP currently has a PEG ratio of 3.43.
Another notable valuation metric for CIO is its P/B ratio of 0.56. 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, EGP has a P/B of 2.63.
These are just a few of the metrics contributing to CIO's Value grade of A and EGP's Value grade of D.
Both CIO and EGP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CIO is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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).
Zacks Investment Research
