SJI vs. ATO: Which Stock Should Value Investors Buy Now?

Investors interested in Utility - Gas Distribution stocks are likely familiar with South Jersey Industries (SJI) and Atmos Energy (ATO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Right now, South Jersey Industries is sporting a Zacks Rank of #2 (Buy), while Atmos Energy has a Zacks Rank of #3 (Hold). This means that SJI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

SJI currently has a forward P/E ratio of 17.63, while ATO has a forward P/E of 21.47. We also note that SJI has a PEG ratio of 1.73. 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. ATO currently has a PEG ratio of 3.

Another notable valuation metric for SJI is its P/B ratio of 1.72. 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, ATO has a P/B of 2.01.

Based on these metrics and many more, SJI holds a Value grade of B, while ATO has a Value grade of D.

SJI sticks out from ATO in both our Zacks Rank and Style Scores models, so value investors will likely feel that SJI is the better option right now.

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South Jersey Industries, Inc. (SJI) : Free Stock Analysis Report
 
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
 
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