UTL vs. SO: Which Stock Is the Better Value Option?
Investors interested in Utility - Electric Power stocks are likely familiar with Unitil (UTL) and Southern Co. (SO). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Unitil and Southern Co. 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.
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.
UTL currently has a forward P/E ratio of 18.14, while SO has a forward P/E of 18.33. We also note that UTL has a PEG ratio of 3.77. 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. SO currently has a PEG ratio of 4.58.
Another notable valuation metric for UTL is its P/B ratio of 1.57. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SO has a P/B of 1.92.
Based on these metrics and many more, UTL holds a Value grade of B, while SO has a Value grade of C.
Both UTL and SO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UTL is the superior value option right now.
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Unitil Corporation (UTL): Free Stock Analysis Report
Southern Company The (SO): 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.