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GEO vs. SLG: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the REIT and Equity Trust - Other sector might want to consider either Geo Group (GEO - Free Report) or SL Green (SLG - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, Geo Group is sporting a Zacks Rank of #2 (Buy), while SL Green 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 GEO is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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.

GEO currently has a forward P/E ratio of 3.51, while SLG has a forward P/E of 10.40. We also note that GEO has a PEG ratio of 0.35. 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. SLG currently has a PEG ratio of 5.07.

Another notable valuation metric for GEO is its P/B ratio of 0.89. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SLG has a P/B of 1.06.

Based on these metrics and many more, GEO holds a Value grade of A, while SLG has a Value grade of C.

GEO has seen stronger estimate revision activity and sports more attractive valuation metrics than SLG, so it seems like value investors will conclude that GEO is the superior option right now.


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