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GEO vs. CUBE: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Geo Group (GEO) and CubeSmart (CUBE). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Geo Group and CubeSmart are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GEO currently has a forward P/E ratio of 3.22, while CUBE has a forward P/E of 25.92. We also note that GEO has a PEG ratio of 0.32. 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. CUBE currently has a PEG ratio of 2.65.

Another notable valuation metric for GEO is its P/B ratio of 1.01. 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, CUBE has a P/B of 5.57.

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

Both GEO and CUBE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GEO is the superior value option right now.


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Geo Group Inc The (GEO) : Free Stock Analysis Report
 
CubeSmart (CUBE) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.