Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of National Fuel Gas (NFG) and Chesapeake Utilities (CPK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, National Fuel Gas has a Zacks Rank of #2 (Buy), while Chesapeake Utilities has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NFG likely has seen a stronger improvement to its earnings outlook than CPK has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
NFG currently has a forward P/E ratio of 16.72, while CPK has a forward P/E of 25.71. We also note that NFG has a PEG ratio of 3.48. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CPK currently has a PEG ratio of 4.29.
Another notable valuation metric for NFG is its P/B ratio of 2.53. 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, CPK has a P/B of 2.86.
These metrics, and several others, help NFG earn a Value grade of B, while CPK has been given a Value grade of C.
NFG sticks out from CPK in both our Zacks Rank and Style Scores models, so value investors will likely feel that NFG is the better option right now.
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National Fuel Gas Company (NFG) : Free Stock Analysis Report
Chesapeake Utilities Corporation (CPK) : Free Stock Analysis Report
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