Investors with an interest in Oil and Gas - Production and Pipelines stocks have likely encountered both Ultrapar Participacoes S.A. (UGP) and MPLX LP (MPLX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Ultrapar Participacoes S.A. has a Zacks Rank of #2 (Buy), while MPLX LP has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that UGP likely has seen a stronger improvement to its earnings outlook than MPLX has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
UGP currently has a forward P/E ratio of 12.48, while MPLX has a forward P/E of 13.00. We also note that UGP has a PEG ratio of 1.61. 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. MPLX currently has a PEG ratio of 5.26.
Another notable valuation metric for UGP is its P/B ratio of 1.75. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MPLX has a P/B of 4.11.
These are just a few of the metrics contributing to UGP's Value grade of A and MPLX's Value grade of C.
UGP has seen stronger estimate revision activity and sports more attractive valuation metrics than MPLX, so it seems like value investors will conclude that UGP is the superior option right now.
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Ultrapar Participacoes S.A. (UGP): Free Stock Analysis Report MPLX LP (MPLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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