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

Zacks Equity Research

Investors with an interest in Utility - Gas Distribution stocks have likely encountered both South Jersey Industries (SJI) and ONE Gas (OGS). But which of these two stocks presents investors with the better value opportunity right now? 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.

Currently, South Jersey Industries has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SJI has an improving earnings outlook. But this is only part of the picture 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.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SJI currently has a forward P/E ratio of 17.22, while OGS has a forward P/E of 24.91. We also note that SJI has a PEG ratio of 1.69. 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. OGS currently has a PEG ratio of 4.53.

Another notable valuation metric for SJI 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, OGS has a P/B of 2.23.

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

SJI has seen stronger estimate revision activity and sports more attractive valuation metrics than OGS, so it seems like value investors will conclude that SJI is the superior option right now.


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South Jersey Industries, Inc. (SJI) : Free Stock Analysis Report
 
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
 
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Zacks Investment Research