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GEO vs. EGP: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Geo Group (GEO - Free Report) and EastGroup Properties (EGP - Free Report) . 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.
Currently, Geo Group has a Zacks Rank of #2 (Buy), while EastGroup Properties has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GEO likely has seen a stronger improvement to its earnings outlook than EGP has recently. 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 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.
GEO currently has a forward P/E ratio of 3.44, while EGP has a forward P/E of 22.50. We also note that GEO has a PEG ratio of 0.34. 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. EGP currently has a PEG ratio of 2.87.
Another notable valuation metric for GEO is its P/B ratio of 0.95. 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, EGP has a P/B of 3.42.
Based on these metrics and many more, GEO holds a Value grade of A, while EGP has a Value grade of D.
GEO 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 GEO is likely the superior value option right now.