U.S. Markets closed
  • S&P 500

    3,585.62
    -54.85 (-1.51%)
     
  • Dow 30

    28,725.51
    -500.10 (-1.71%)
     
  • Nasdaq

    10,575.62
    -161.89 (-1.51%)
     
  • Russell 2000

    1,664.72
    -10.21 (-0.61%)
     
  • Crude Oil

    79.74
    -1.49 (-1.83%)
     
  • Gold

    1,668.30
    -0.30 (-0.02%)
     
  • Silver

    19.01
    +0.30 (+1.62%)
     
  • EUR/USD

    0.9801
    -0.0018 (-0.1862%)
     
  • 10-Yr Bond

    3.8040
    +0.0570 (+1.52%)
     
  • Vix

    31.62
    -0.22 (-0.69%)
     
  • GBP/USD

    1.1166
    +0.0043 (+0.3841%)
     
  • USD/JPY

    144.7200
    +0.2770 (+0.1918%)
     
  • BTC-USD

    19,225.20
    -102.61 (-0.53%)
     
  • CMC Crypto 200

    443.49
    +0.06 (+0.01%)
     
  • FTSE 100

    6,893.81
    +12.22 (+0.18%)
     
  • Nikkei 225

    25,937.21
    -484.84 (-1.83%)
     

UGP vs. WMB: Which Stock Is the Better Value Option?

·2 min read

Investors looking for stocks in the Oil and Gas - Production and Pipelines sector might want to consider either Ultrapar Participacoes S.A. (UGP) or Williams Companies, Inc. The (WMB). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Ultrapar Participacoes S.A. has a Zacks Rank of #2 (Buy), while Williams Companies, Inc. The has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UGP likely has seen a stronger improvement to its earnings outlook than WMB has recently. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

UGP currently has a forward P/E ratio of 13.72, while WMB has a forward P/E of 20.82. We also note that UGP has a PEG ratio of 0.54. 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. WMB currently has a PEG ratio of 4.16.

Another notable valuation metric for UGP is its P/B ratio of 2.09. 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, WMB has a P/B of 2.10.

These metrics, and several others, help UGP earn a Value grade of A, while WMB has been given a Value grade of C.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Ultrapar Participacoes S.A. (UGP) : Free Stock Analysis Report
 
Williams Companies, Inc. The (WMB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research