Investors looking for stocks in the Oil and Gas - Production Pipeline - MLB sector might want to consider either Energy Transfer LP (ET) or Oneok Inc. (OKE). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Energy Transfer LP and Oneok Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ET's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
ET currently has a forward P/E ratio of 12.45, while OKE has a forward P/E of 15.91. We also note that ET has a PEG ratio of 0.58. 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. OKE currently has a PEG ratio of 1.68.
Another notable valuation metric for ET is its P/B ratio of 1.45. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OKE has a P/B of 2.35.
Based on these metrics and many more, ET holds a Value grade of A, while OKE has a Value grade of C.
ET is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ET is likely the superior value option right now.
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Energy Transfer LP (ET): Free Stock Analysis Report ONEOK, Inc. (OKE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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