Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Unitil (UTL) and MGE (MGEE). But which of these two stocks presents investors with the better value opportunity right now? 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.
Right now, Unitil is sporting a Zacks Rank of #2 (Buy), while MGE has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UTL likely has seen a stronger improvement to its earnings outlook than MGEE has recently. However, value investors will care about much more than just this.
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.
UTL currently has a forward P/E ratio of 18.83, while MGEE has a forward P/E of 24.06. We also note that UTL has a PEG ratio of 2.66. 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. MGEE currently has a PEG ratio of 5.70.
Another notable valuation metric for UTL is its P/B ratio of 1.69. 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, MGEE has a P/B of 2.52.
These metrics, and several others, help UTL earn a Value grade of B, while MGEE has been given a Value grade of D.
UTL stands above MGEE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that UTL is the superior value option right now.
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Unitil Corporation (UTL) : Free Stock Analysis Report
MGE Energy Inc. (MGEE) : Free Stock Analysis Report
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