Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Healthpeak (DOC) 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.
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.
Currently, Healthpeak has a Zacks Rank of #2 (Buy), while National Health Investors has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DOC is likely seeing its earnings outlook improve to a greater extent. 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.
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.
DOC currently has a forward P/E ratio of 9.77, while NHI has a forward P/E of 16.88. We also note that DOC has a PEG ratio of 2.34. 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. NHI currently has a PEG ratio of 4.62.
Another notable valuation metric for DOC is its P/B ratio of 1.47. 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 2.66.
Based on these metrics and many more, DOC holds a Value grade of B, while NHI has a Value grade of D.
DOC has seen stronger estimate revision activity and sports more attractive valuation metrics than NHI, so it seems like value investors will conclude that DOC is the superior option right now.
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Healthpeak Properties, Inc. (DOC): Free Stock Analysis Report
National Health Investors, Inc. (NHI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).