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

Zacks Equity Research
·2-min read

Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Geo Group (GEO) and Gaming and Leisure Properties (GLPI). 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 and Gaming and Leisure Properties are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, 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. 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.

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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 3.60, while GLPI has a forward P/E of 13.98. We also note that GEO has a PEG ratio of 0.36. 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. GLPI currently has a PEG ratio of 3.87.

Another notable valuation metric for GEO is its P/B ratio of 1.13. 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, GLPI has a P/B of 4.02.

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

GEO stands above GLPI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GEO is the superior value 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
 
Gaming and Leisure Properties, Inc. (GLPI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research