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

Investors with an interest in Utility - Gas Distribution stocks have likely encountered both Northwest Natural (NWN) and ONE Gas (OGS). 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.

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 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.

Northwest Natural has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NWN 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.

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.

NWN currently has a forward P/E ratio of 18, while OGS has a forward P/E of 18.91. We also note that NWN has a PEG ratio of 3.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. OGS currently has a PEG ratio of 3.78.

Another notable valuation metric for NWN is its P/B ratio of 1.59. 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, OGS has a P/B of 1.68.

These metrics, and several others, help NWN earn a Value grade of B, while OGS has been given a Value grade of D.

NWN sticks out from OGS in both our Zacks Rank and Style Scores models, so value investors will likely feel that NWN is the better option right now.


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Northwest Natural Gas Company (NWN) : Free Stock Analysis Report
 
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
 
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