Yahoo Finance MDU or NJR: Which Is the Better Value Stock Right Now?
Investors interested in Utility - Gas Distribution stocks are likely familiar with MDU Resources (MDU) and 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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both MDU Resources and New Jersey Resources are sporting a Zacks Rank of # 2 (Buy). 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 piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
MDU currently has a forward P/E ratio of 14.46, while NJR has a forward P/E of 19.78. We also note that MDU has a PEG ratio of 2.41. 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. NJR currently has a PEG ratio of 3.30.
Another notable valuation metric for MDU is its P/B ratio of 1.79. 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, NJR has a P/B of 2.59.
These are just a few of the metrics contributing to MDU's Value grade of B and NJR's Value grade of C.
Both MDU and NJR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MDU is the superior value option right now.
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MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
