Investors with an interest in Utility - Electric Power stocks have likely encountered both 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Unitil and MGE are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that UTL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
UTL currently has a forward P/E ratio of 20.64, while MGEE has a forward P/E of 26.81. We also note that UTL has a PEG ratio of 3.06. 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. MGEE currently has a PEG ratio of 6.35.
Another notable valuation metric for UTL is its P/B ratio of 1.85. 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 2.81.
These metrics, and several others, help UTL earn a Value grade of B, while MGEE has been given a Value grade of D.
UTL has seen stronger estimate revision activity and sports more attractive valuation metrics than MGEE, so it seems like value investors will conclude that UTL is the superior 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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