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Investors looking for stocks in the Utility - Gas Distribution sector might want to consider either Spire (SR) or ONE Gas (OGS). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Spire has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SR likely has seen a stronger improvement to its earnings outlook than OGS has recently. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 15.43, while OGS has a forward P/E of 17.07. We also note that SR has a PEG ratio of 2.65. 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. OGS currently has a PEG ratio of 5.91.
Another notable valuation metric for SR is its P/B ratio of 1.34. 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 1.47.
These are just a few of the metrics contributing to SR's Value grade of A and OGS's Value grade of C.
SR sticks out from OGS in both our Zacks Rank and Style Scores models, so value investors will likely feel that SR is the better option right now.
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Spire Inc. (SR) : Free Stock Analysis Report
ONE Gas, Inc. (OGS) : Free Stock Analysis Report