UTL vs. MGEE: Which Stock Should Value Investors Buy Now?
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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Unitil has a Zacks Rank of #2 (Buy), while MGE has a Zacks Rank of #4 (Sell). 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.
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 17.98, while MGEE has a forward P/E of 20.47. We also note that UTL has a PEG ratio of 2.54. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MGEE currently has a PEG ratio of 3.83.
Another notable valuation metric for UTL is its P/B ratio of 1.73. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MGEE has a P/B of 2.39.
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
