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NFG vs. NWN: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Utility - Gas Distribution sector might want to consider either National Fuel Gas (NFG) or Northwest Natural (NWN). But which of these two stocks presents investors with the better value opportunity right now? 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 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.

Right now, both National Fuel Gas and Northwest Natural are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

NFG currently has a forward P/E ratio of 15.61, while NWN has a forward P/E of 29.51. We also note that NFG has a PEG ratio of 5.58. 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 6.56.

Another notable valuation metric for NFG is its P/B ratio of 2.22. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NWN has a P/B of 2.55.

These are just a few of the metrics contributing to NFG's Value grade of A and NWN's 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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