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CIO vs. OHI: Which Stock Should Value Investors Buy Now?
Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both City Office REIT (CIO - Free Report) and Omega Healthcare Investors (OHI - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
City Office REIT and Omega Healthcare Investors are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
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.
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.
CIO currently has a forward P/E ratio of 4.91, while OHI has a forward P/E of 13.88. We also note that CIO has a PEG ratio of 0.82. 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. OHI currently has a PEG ratio of 1.16.
Another notable valuation metric for CIO is its P/B ratio of 0.36. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, OHI has a P/B of 2.42.
Based on these metrics and many more, CIO holds a Value grade of A, while OHI has a Value grade of C.
Both CIO and OHI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CIO is the superior value option right now.