Investors interested in REIT and Equity Trust - Other stocks are likely familiar with CCA (CXW - Free Report) and Highwoods Properties (HIW - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
CCA has a Zacks Rank of #2 (Buy), while Highwoods Properties has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CXW is likely seeing its earnings outlook improve to a greater extent. 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.
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.
CXW currently has a forward P/E ratio of 9.41, while HIW has a forward P/E of 14.14. We also note that CXW has a PEG ratio of 1.57. 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. HIW currently has a PEG ratio of 4.71.
Another notable valuation metric for CXW is its P/B ratio of 1.75. 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, HIW has a P/B of 2.26.
These metrics, and several others, help CXW earn a Value grade of A, while HIW has been given a Value grade of D.
CXW has seen stronger estimate revision activity and sports more attractive valuation metrics than HIW, so it seems like value investors will conclude that CXW is the superior option right now.