Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of Spire (SR) 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.
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.
Both Spire and Northwest Natural have a Zacks Rank of # 2 (Buy) right now. 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. But this is just one factor that value investors are interested in.
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.
SR currently has a forward P/E ratio of 22.83, while NWN has a forward P/E of 29.28. We also note that SR has a PEG ratio of 6.04. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NWN currently has a PEG ratio of 6.51.
Another notable valuation metric for SR is its P/B ratio of 1.80. 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 2.60.
These metrics, and several others, help SR earn a Value grade of B, while NWN has been given a Value grade of C.
Both SR and NWN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SR is the superior value option right now.
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Spire Inc. (SR) : Free Stock Analysis Report
Northwest Natural Gas Company (NWN) : Free Stock Analysis Report
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