Investors looking for stocks in the Utility - Gas Distribution sector might want to consider either ONE Gas (OGS) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
ONE Gas and Northwest Natural are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
OGS currently has a forward P/E ratio of 26.99, while NWN has a forward P/E of 29.81. We also note that OGS has a PEG ratio of 4.40. 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 5.96.
Another notable valuation metric for OGS is its P/B ratio of 2.37. 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 2.43.
These metrics, and several others, help OGS earn a Value grade of B, while NWN has been given a Value grade of C.
Both OGS and NWN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that OGS is the superior value option right now.
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ONE Gas, Inc. (OGS) : Free Stock Analysis Report
Northwest Natural Gas Company (NWN) : Free Stock Analysis Report
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