Investors looking for stocks in the Utility - Gas Distribution sector might want to consider either Spire (SR) or Atmos Energy (ATO). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Spire and Atmos Energy are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
SR currently has a forward P/E ratio of 16.62, while ATO has a forward P/E of 22.54. We also note that SR has a PEG ratio of 2.44. 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. ATO currently has a PEG ratio of 3.08.
Another notable valuation metric for SR is its P/B ratio of 1.53. 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, ATO has a P/B of 2.11.
These are just a few of the metrics contributing to SR's Value grade of B and ATO's Value grade of D.
Both SR and ATO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SR is the superior value option right now.
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Spire Inc. (SR): Free Stock Analysis Report Atmos Energy Corporation (ATO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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