U.S. Markets open in 3 hrs 44 mins

ENBL or EPD: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Oil and Gas - Production Pipeline - MLB sector might want to consider either Enable Midstream Partners, LP (ENBL) or Enterprise Products Partners (EPD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Currently, Enable Midstream Partners, LP has a Zacks Rank of #1 (Strong Buy), while Enterprise Products Partners has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ENBL is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ENBL currently has a forward P/E ratio of 12.80, while EPD has a forward P/E of 14.95. We also note that ENBL has a PEG ratio of 3.43. 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. EPD currently has a PEG ratio of 4.98.

Another notable valuation metric for ENBL is its P/B ratio of 0.81. 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, EPD has a P/B of 2.61.

These metrics, and several others, help ENBL earn a Value grade of B, while EPD has been given a Value grade of C.

ENBL has seen stronger estimate revision activity and sports more attractive valuation metrics than EPD, so it seems like value investors will conclude that ENBL is the superior 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
Enable Midstream Partners, LP (ENBL) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research