Investors looking for stocks in the Utility - Electric Power sector might want to consider either Unitil (UTL) or MGE (MGEE). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Currently, Unitil has a Zacks Rank of #2 (Buy), while MGE has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that UTL has an improving earnings outlook. But this is just one piece of the puzzle 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.
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.
UTL currently has a forward P/E ratio of 17.64, while MGEE has a forward P/E of 20.46. We also note that UTL has a PEG ratio of 2.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MGEE currently has a PEG ratio of 3.82.
Another notable valuation metric for UTL is its P/B ratio of 1.70. 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, MGEE has a P/B of 2.39.
Based on these metrics and many more, UTL holds a Value grade of B, while MGEE has a Value grade of F.
UTL has seen stronger estimate revision activity and sports more attractive valuation metrics than MGEE, so it seems like value investors will conclude that UTL is the superior option right now.
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Today, See These 5 Potential Home Runs >>Unitil Corporation (UTL) : Free Stock Analysis Report
MGE Energy Inc. (MGEE) : 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.
