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Investors interested in stocks from the REIT and Equity Trust - Other sector have probably already heard of Community Healthcare Trust (CHCT) and National Health Investors (NHI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Community Healthcare Trust and National Health Investors 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 CHCT has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
CHCT currently has a forward P/E ratio of 8.36, while NHI has a forward P/E of 17.34. We also note that CHCT has a PEG ratio of 1.04. 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. NHI currently has a PEG ratio of 5.12.
Another notable valuation metric for CHCT is its P/B ratio of 1.09. 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, NHI has a P/B of 2.71.
These are just a few of the metrics contributing to CHCT's Value grade of B and NHI's Value grade of D.
CHCT sticks out from NHI in both our Zacks Rank and Style Scores models, so value investors will likely feel that CHCT is the better option right now.
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Community Healthcare Trust Incorporated (CHCT) : Free Stock Analysis Report
National Health Investors, Inc. (NHI) : Free Stock Analysis Report