Investors interested in Utility - Gas Distribution stocks are likely familiar with Spire (SR) and ONE Gas (OGS). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Spire and ONE Gas are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
SR currently has a forward P/E ratio of 21.42, while OGS has a forward P/E of 25.40. We also note that SR has a PEG ratio of 3.89. 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. OGS currently has a PEG ratio of 4.14.
Another notable valuation metric for SR is its P/B ratio of 1.77. 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, OGS has a P/B of 2.23.
Based on these metrics and many more, SR holds a Value grade of B, while OGS has a Value grade of C.
Both SR and OGS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SR is the superior value option right now.
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