UGI vs. NJR: Which Stock Is the Better Value Option?
Investors looking for stocks in the Utility - Gas Distribution sector might want to consider either UGI (UGI) or New Jersey Resources (NJR). But which of these two companies is the best option for those looking for undervalued stocks? 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.
UGI and New Jersey Resources are both sporting a Zacks Rank of # 2 (Buy) right now. 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
UGI currently has a forward P/E ratio of 14.91, while NJR has a forward P/E of 20.72. We also note that UGI has a PEG ratio of 1.86. 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. NJR currently has a PEG ratio of 2.92.
Another notable valuation metric for UGI is its P/B ratio of 1.93. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NJR has a P/B of 2.21.
These are just a few of the metrics contributing to UGI's Value grade of B and NJR's Value grade of C.
Both UGI and NJR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UGI is the superior value option right now.
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UGI Corporation (UGI) : Free Stock Analysis Report
NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
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