RTL or OFC: Which Is the Better Value Stock Right Now?

Investors interested in REIT and Equity Trust - Other stocks are likely familiar with The Necessity Retail (RTL) and Corporate Office Properties (OFC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

The Necessity Retail and Corporate Office Properties are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RTL has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

RTL currently has a forward P/E ratio of 6.16, while OFC has a forward P/E of 11.25. We also note that RTL has a PEG ratio of 1.03. 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. OFC currently has a PEG ratio of 2.14.

Another notable valuation metric for RTL is its P/B ratio of 0.53. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, OFC has a P/B of 1.75.

These metrics, and several others, help RTL earn a Value grade of B, while OFC has been given 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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