Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either Alpine Income (PINE) or 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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Alpine Income and Omega Healthcare Investors have a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
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.
PINE currently has a forward P/E ratio of 8.55, while OHI has a forward P/E of 13.92. We also note that PINE has a PEG ratio of 1.22. 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 1.76.
Another notable valuation metric for PINE is its P/B ratio of 0.9. 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, OHI has a P/B of 2.43.
These metrics, and several others, help PINE earn a Value grade of B, while OHI has been given a Value grade of C.
Both PINE and OHI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PINE is the superior value option right now.
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Alpine Income Property Trust, Inc. (PINE): Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).