GLPI vs. OHI: Which Stock Is the Better Value Option?

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Gaming and Leisure Properties (GLPI) 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Gaming and Leisure Properties and Omega Healthcare Investors are sporting a Zacks Rank of #2 (Buy). 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. 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.

GLPI currently has a forward P/E ratio of 10.91, while OHI has a forward P/E of 15.72. We also note that GLPI has a PEG ratio of 1.94. 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 2.07.

Another notable valuation metric for GLPI is its P/B ratio of 2.52. 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 2.76.

Based on these metrics and many more, GLPI holds a Value grade of B, while OHI has a Value grade of C.

Both GLPI and OHI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GLPI is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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