MDU vs. ATO: Which Stock Is the Better Value Option?
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 stocks offers value investors a better bang for their buck right now? We'll need to 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.
Currently, MDU Resources has a Zacks Rank of #2 (Buy), while Atmos Energy 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 ATO has recently. But this is just one piece of the puzzle for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
MDU currently has a forward P/E ratio of 14.86, while ATO has a forward P/E of 18.84. We also note that MDU has a PEG ratio of 2.57. 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. ATO currently has a PEG ratio of 2.60.
Another notable valuation metric for MDU is its P/B ratio of 1.51. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ATO has a P/B of 1.60.
These are just a few of the metrics contributing to MDU's Value grade of B and ATO's Value grade of C.
MDU sticks out from ATO in both our Zacks Rank and Style Scores models, so value investors will likely feel that MDU is the better option right now.
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MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
