MDU or ATO: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of MDU Resources (MDU) and Atmos Energy (ATO). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both MDU Resources and Atmos Energy are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
MDU currently has a forward P/E ratio of 15.11, while ATO has a forward P/E of 19.07. We also note that MDU has a PEG ratio of 2.62. 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. ATO currently has a PEG ratio of 2.63.
Another notable valuation metric for MDU is its P/B ratio of 1.54. 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, ATO has a P/B of 1.62.
Based on these metrics and many more, MDU holds a Value grade of B, while ATO has a Value grade of C.
Both MDU and ATO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MDU is the superior value option right now.
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MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
