Investors with an interest in Oil and Gas - Production and Pipelines stocks have likely encountered both Transportadora De Gas Sa Ord B (TGS) and Williams Companies, Inc. (The) (WMB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Transportadora De Gas Sa Ord B has a Zacks Rank of #2 (Buy), while Williams Companies, Inc. (The) has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TGS is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TGS currently has a forward P/E ratio of 12.55, while WMB has a forward P/E of 26.00. We also note that TGS has a PEG ratio of 1.20. 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. WMB currently has a PEG ratio of 1.40.
Another notable valuation metric for TGS is its P/B ratio of 1.93. 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, WMB has a P/B of 4.97.
These metrics, and several others, help TGS earn a Value grade of B, while WMB has been given a Value grade of D.
TGS stands above WMB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TGS is the superior value option right now.
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Transportadora De Gas Sa Ord B (TGS): Free Stock Analysis Report Williams Companies, Inc. (The) (WMB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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