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

Zacks Equity Research
·2 min read

Investors looking for stocks in the Utility - Gas Distribution sector might want to consider either Southwest Gas (SWX) or ONE Gas (OGS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Southwest Gas has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #4 (Sell) right now. This means that SWX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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.

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.

SWX currently has a forward P/E ratio of 19.08, while OGS has a forward P/E of 21.76. We also note that SWX has a PEG ratio of 3.18. 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. OGS currently has a PEG ratio of 3.96.

Another notable valuation metric for SWX is its P/B ratio of 1.52. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OGS has a P/B of 1.87.

These are just a few of the metrics contributing to SWX's Value grade of B and OGS's Value grade of C.

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


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Southwest Gas Corporation (SWX) : Free Stock Analysis Report
 
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
 
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