Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of ONE Gas (OGS) and MDU Resources (MDU). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, ONE Gas is sporting a Zacks Rank of #2 (Buy), while MDU Resources has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that OGS likely has seen a stronger improvement to its earnings outlook than MDU has recently. But this is just one factor that value investors are interested in.
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.
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.
OGS currently has a forward P/E ratio of 16.41, while MDU has a forward P/E of 20.13. We also note that OGS has a PEG ratio of 2.47. 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. MDU currently has a PEG ratio of 3.21.
Another notable valuation metric for OGS is its P/B ratio of 1.46. 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, MDU has a P/B of 1.52.
Based on these metrics and many more, OGS holds a Value grade of B, while MDU has a Value grade of C.
OGS stands above MDU thanks to its solid earnings outlook, and based on these valuation figures, we also feel that OGS is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ONE Gas, Inc. (OGS): Free Stock Analysis Report MDU Resources Group, Inc. (MDU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
