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CXW or DLR: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of CCA and Digital Realty Trust (DLR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, CCA is sporting a Zacks Rank of #1 (Strong Buy), while Digital Realty Trust has a Zacks Rank of #3 (Hold). This means that CXW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CXW currently has a forward P/E ratio of 11.14, while DLR has a forward P/E of 18.48. We also note that CXW has a PEG ratio of 1.86. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DLR currently has a PEG ratio of 2.68.

Another notable valuation metric for CXW is its P/B ratio of 2.13. 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, DLR has a P/B of 2.63.

Based on these metrics and many more, CXW holds a Value grade of B, while DLR has a Value grade of D.

CXW sticks out from DLR in both our Zacks Rank and Style Scores models, so value investors will likely feel that CXW is the better option right now.


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