Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Cousins Properties (CUZ) and National Health Investors (NHI). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Cousins Properties has a Zacks Rank of #2 (Buy), while National Health Investors has a Zacks Rank of #3 (Hold) right now. This means that CUZ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
CUZ currently has a forward P/E ratio of 9.88, while NHI has a forward P/E of 16.30. We also note that CUZ has a PEG ratio of 2.68. 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. NHI currently has a PEG ratio of 4.96.
Another notable valuation metric for CUZ is its P/B ratio of 0.95. 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, NHI has a P/B of 2.50.
Based on these metrics and many more, CUZ holds a Value grade of B, while NHI has a Value grade of D.
CUZ 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 CUZ is likely the superior value option right now.
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Cousins Properties Incorporated (CUZ): Free Stock Analysis Report National Health Investors, Inc. (NHI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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