Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of National Fuel Gas (NFG) and Northwest Natural (NWN). 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.
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.
National Fuel Gas and Northwest Natural are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 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 15.96, while NWN has a forward P/E of 29.49. We also note that NFG has a PEG ratio of 5.70. 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 6.55.
Another notable valuation metric for NFG is its P/B ratio of 2.34. 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 2.55.
Based on these metrics and many more, NFG holds a Value grade of B, 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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