Investors interested in stocks from the Transportation - Shipping sector have probably already heard of Hoegh LNG (HMLP) and Martin Midstream Partners L.P. (MMLP). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Right now, Hoegh LNG is sporting a Zacks Rank of #2 (Buy), while Martin Midstream Partners L.P. has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HMLP is likely seeing its earnings outlook improve to a greater extent. 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.
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.
HMLP currently has a forward P/E ratio of 10.22, while MMLP has a forward P/E of 16.95. We also note that HMLP has a PEG ratio of 0.72. 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. MMLP currently has a PEG ratio of 8.47.
Another notable valuation metric for HMLP is its P/B ratio of 1.59. 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, MMLP has a P/B of 1.69.
Based on these metrics and many more, HMLP holds a Value grade of B, while MMLP has a Value grade of C.
HMLP 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 HMLP is likely the superior value option right now.
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Hoegh LNG Partners LP (HMLP) : Free Stock Analysis Report
Martin Midstream Partners L.P. (MMLP) : Free Stock Analysis Report
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