MDU or NJR: Which Is the Better Value Stock Right Now?
Investors with an interest in Utility - Gas Distribution stocks have likely encountered both MDU Resources (MDU) and New Jersey Resources (NJR). 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.
Right now, MDU Resources is sporting a Zacks Rank of #2 (Buy), while New Jersey Resources has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MDU likely has seen a stronger improvement to its earnings outlook than NJR has recently. However, value investors will care about much more than just this.
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 14.27, while NJR has a forward P/E of 15.27. We also note that MDU has a PEG ratio of 2.47. 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. NJR currently has a PEG ratio of 2.55.
Another notable valuation metric for MDU 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, NJR has a P/B of 2.05.
These are just a few of the metrics contributing to MDU's Value grade of B and NJR's Value grade of C.
MDU 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 MDU is likely the superior value option right now.
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MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
