Investors with an interest in Utility - Gas Distribution stocks have likely encountered both UGI (UGI) and Vectren (VVC). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, UGI has a Zacks Rank of #2 (Buy), while Vectren has a Zacks Rank of #3 (Hold). This means that UGI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
UGI currently has a forward P/E ratio of 19.66, while VVC has a forward P/E of 24.84. We also note that UGI has a PEG ratio of 2.46. 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. VVC currently has a PEG ratio of 3.55.
Another notable valuation metric for UGI is its P/B ratio of 2.23. 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, VVC has a P/B of 3.18.
These are just a few of the metrics contributing to UGI's Value grade of B and VVC's Value grade of C.
UGI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that UGI is likely the superior value option right now.
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UGI Corporation (UGI) : Free Stock Analysis Report
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