Investors with an interest in Oil and Gas - Production and Pipelines stocks have likely encountered both Transportadora De Gas Sa Ord B (TGS) and MPLX LP (MPLX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Transportadora De Gas Sa Ord B has a Zacks Rank of #2 (Buy), while MPLX LP has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TGS has an improving earnings outlook. But this is only part of the picture 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.
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.
TGS currently has a forward P/E ratio of 9.83, while MPLX has a forward P/E of 13.48. We also note that TGS has a PEG ratio of 0.54. 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. MPLX currently has a PEG ratio of 5.46.
Another notable valuation metric for TGS is its P/B ratio of 1.6. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MPLX has a P/B of 4.08.
Based on these metrics and many more, TGS holds a Value grade of B, while MPLX has a Value grade of C.
TGS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TGS is likely the superior value option right now.
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Transportadora De Gas Sa Ord B (TGS): Free Stock Analysis Report
MPLX LP (MPLX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).