TGS vs. MPLX: Which Stock Is the Better Value Option?

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 stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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 and MPLX LP are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TGS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

TGS currently has a forward P/E ratio of 11.07, while MPLX has a forward P/E of 13.10. We also note that TGS has a PEG ratio of 1.07. 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. MPLX currently has a PEG ratio of 5.30.

Another notable valuation metric for TGS is its P/B ratio of 1.85. 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, MPLX has a P/B of 3.94.

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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This article originally published on Zacks Investment Research (zacks.com).

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