Investors with an interest in Utility - Gas Distribution stocks have likely encountered both National Fuel Gas (NFG) and Northwest Natural (NWN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both National Fuel Gas and Northwest Natural are sporting 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. 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.
NFG currently has a forward P/E ratio of 15.39, while NWN has a forward P/E of 28.49. We also note that NFG has a PEG ratio of 5.50. 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. NWN currently has a PEG ratio of 6.33.
Another notable valuation metric for NFG is its P/B ratio of 2.19. 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, NWN has a P/B of 2.46.
Based on these metrics and many more, NFG holds a Value grade of A, while NWN has a Value grade of C.
Both NFG and NWN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NFG is the superior value option right now.
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National Fuel Gas Company (NFG) : Free Stock Analysis Report
Northwest Natural Gas Company (NWN) : Free Stock Analysis Report
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