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

Zacks Equity Research
·2-min read

Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Geo Group (GEO) and Corporate Office Properties (OFC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Geo Group has a Zacks Rank of #1 (Strong Buy), while Corporate Office Properties has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that GEO likely has seen a stronger improvement to its earnings outlook than OFC has recently. 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.

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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.

GEO currently has a forward P/E ratio of 2.99, while OFC has a forward P/E of 11.43. We also note that GEO has a PEG ratio of 0.30. 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. OFC currently has a PEG ratio of 2.17.

Another notable valuation metric for GEO is its P/B ratio of 0.84. 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, OFC has a P/B of 1.78.

These metrics, and several others, help GEO earn a Value grade of A, while OFC has been given a Value grade of C.

GEO sticks out from OFC in both our Zacks Rank and Style Scores models, so value investors will likely feel that GEO is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Geo Group Inc The (GEO) : Free Stock Analysis Report
 
Corporate Office Properties Trust (OFC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.