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RTL vs. OHI: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both The Necessity Retail (RTL) and Omega Healthcare Investors (OHI). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, The Necessity Retail has a Zacks Rank of #2 (Buy), while Omega Healthcare Investors has a Zacks Rank of #4 (Sell). This means that RTL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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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.

RTL currently has a forward P/E ratio of 6.49, while OHI has a forward P/E of 10.43. We also note that RTL has a PEG ratio of 1.08. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OHI currently has a PEG ratio of 6.44.

Another notable valuation metric for RTL is its P/B ratio of 0.55. 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 1.66.

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

RTL 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 RTL is likely the superior value option right now.


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The Necessity Retail REIT, Inc. (RTL) : Free Stock Analysis Report
 
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
 
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Zacks Investment Research