Investors with an interest in Utility - Gas Distribution stocks have likely encountered both South Jersey Industries (SJI) and Sempra (SRE). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
South Jersey Industries and Sempra are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SJI is likely seeing its earnings outlook improve to a greater extent. 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.
SJI currently has a forward P/E ratio of 15.15, while SRE has a forward P/E of 16.15. We also note that SJI has a PEG ratio of 2.69. 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. SRE currently has a PEG ratio of 3.31.
Another notable valuation metric for SJI is its P/B ratio of 1.57. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SRE has a P/B of 1.84.
These are just a few of the metrics contributing to SJI's Value grade of B and SRE's Value grade of C.
SJI stands above SRE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SJI is the superior value option right now.
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South Jersey Industries, Inc. (SJI) : Free Stock Analysis Report
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