Investors looking for stocks in the Oil and Gas - Production Pipeline - MLB sector might want to consider either Enterprise Products Partners (EPD) or Oneok Inc. (OKE). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Enterprise Products Partners and Oneok Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that EPD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.
EPD currently has a forward P/E ratio of 11.49, while OKE has a forward P/E of 16.40. We also note that EPD has a PEG ratio of 1.54. 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. OKE currently has a PEG ratio of 3.73.
Another notable valuation metric for EPD is its P/B ratio of 2.45. 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, OKE has a P/B of 3.38.
These are just a few of the metrics contributing to EPD's Value grade of B and OKE's Value grade of C.
EPD has seen stronger estimate revision activity and sports more attractive valuation metrics than OKE, so it seems like value investors will conclude that EPD is the superior option right now.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpEnterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
ONEOK, Inc. (OKE) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
