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GEO vs. VTR: Which Stock Is the Better Value Option?

By Zacks Investment ResearchStock MarketsNov 05, 2020 11:40PM ET
www.investing.com/analysis/geo-vs-vtr-which-stock-is-the-better-value-option-200543781
GEO vs. VTR: Which Stock Is the Better Value Option?
By Zacks Investment Research   |  Nov 05, 2020 11:40PM ET
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Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Geo Group (NYSE:GEO) and Ventas (NYSE:VTR). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Geo Group has a Zacks Rank of #2 (Buy), while Ventas 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 GEO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GEO currently has a forward P/E ratio of 3.33, while VTR has a forward P/E of 12.95. We also note that GEO has a PEG ratio of 0.33. 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. VTR currently has a PEG ratio of 4.32.

Another notable valuation metric for GEO is its P/B ratio of 1.06. 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, VTR has a P/B of 1.48.

These are just a few of the metrics contributing to GEO's Value grade of A and VTR's Value grade of C.

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.


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GEO vs. VTR: Which Stock Is the Better Value Option?
 

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GEO vs. VTR: Which Stock Is the Better Value Option?

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