MDU vs. NJR: 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 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.
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.
Right now, MDU Resources is sporting a Zacks Rank of #2 (Buy), while New Jersey Resources has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MDU is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MDU currently has a forward P/E ratio of 15.64, while NJR has a forward P/E of 16.37. We also note that MDU has a PEG ratio of 2.71. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NJR currently has a PEG ratio of 2.73.
Another notable valuation metric for MDU is its P/B ratio of 1.56. 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, NJR has a P/B of 2.09.
Based on these metrics and many more, MDU holds a Value grade of B, while NJR has a 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
