HMLP vs. KEX: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Transportation - Shipping sector might want to consider either Hoegh LNG (HMLP) or Kirby (KEX). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Hoegh LNG has a Zacks Rank of #2 (Buy), while Kirby has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that HMLP likely has seen a stronger improvement to its earnings outlook than KEX has recently. But this is only part of the picture for value investors.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

HMLP currently has a forward P/E ratio of 4.56, while KEX has a forward P/E of 16.07. We also note that HMLP has a PEG ratio of 0.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KEX currently has a PEG ratio of 1.94.

Another notable valuation metric for HMLP is its P/B ratio of 0.66. 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, KEX has a P/B of 0.74.

Based on these metrics and many more, HMLP holds a Value grade of B, while KEX has a Value grade of D.

HMLP is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HMLP is likely the superior value option right now.


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Hoegh LNG Partners LP (HMLP) : Free Stock Analysis Report
 
Kirby Corporation (KEX) : Free Stock Analysis Report
 
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