UGP vs. PBA: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Oil and Gas - Production and Pipelines sector have probably already heard of Ultrapar Participacoes S.A. (UGP) and Pembina Pipeline (PBA). 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.
Right now, both Ultrapar Participacoes S.A. and Pembina Pipeline are sporting a Zacks Rank of # 2 (Buy). 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 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
UGP currently has a forward P/E ratio of 13.44, while PBA has a forward P/E of 16.51. We also note that UGP has a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PBA currently has a PEG ratio of 5.50.
Another notable valuation metric for UGP is its P/B ratio of 1.67. 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, PBA has a P/B of 2.07.
Based on these metrics and many more, UGP holds a Value grade of A, while PBA has a Value grade of C.
Both UGP and PBA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UGP is the superior value option right now.
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Ultrapar Participacoes S.A. (UGP) : Free Stock Analysis Report
Pembina Pipeline Corp. (PBA) : Free Stock Analysis Report
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