Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Gaming and Leisure Properties (GLPI) and Omega Healthcare Investors (OHI). 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.
Right now, Gaming and Leisure Properties is sporting a Zacks Rank of #2 (Buy), while Omega Healthcare Investors has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GLPI likely has seen a stronger improvement to its earnings outlook than OHI has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GLPI currently has a forward P/E ratio of 10.35, while OHI has a forward P/E of 14.48. We also note that GLPI has a PEG ratio of 1.74. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. OHI currently has a PEG ratio of 1.83.
Another notable valuation metric for GLPI is its P/B ratio of 2.3. 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 2.52.
Based on these metrics and many more, GLPI holds a Value grade of B, while OHI has a Value grade of C.
GLPI 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 GLPI is likely the superior value option right now.
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Gaming and Leisure Properties, Inc. (GLPI): Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).