U.S. Markets open in 7 mins

GMLP or CAPL: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Oil and Gas - Refining and Marketing - Master Limited Partnerships sector might want to consider either Golar LNG Partners LP (GMLP) or CrossAmerica Partners (CAPL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, Golar LNG Partners LP has a Zacks Rank of #2 (Buy), while CrossAmerica Partners has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GMLP is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

GMLP currently has a forward P/E ratio of 7.47, while CAPL has a forward P/E of 14.63. We also note that GMLP has a PEG ratio of 0.93. 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. CAPL currently has a PEG ratio of 4.30.

Another notable valuation metric for GMLP is its P/B ratio of 1.17. 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, CAPL has a P/B of 7.02.

These are just a few of the metrics contributing to GMLP's Value grade of A and CAPL's Value grade of C.

GMLP stands above CAPL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GMLP 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
 
Golar LNG Partners LP (GMLP) : Free Stock Analysis Report
 
CrossAmerica Partners LP (CAPL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.