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ATO or SWX: Which Is the Better Value Stock Right Now?
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Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of Atmos Energy (ATO - Free Report) and Southwest Gas (SWX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Atmos Energy is sporting a Zacks Rank of #2 (Buy), while Southwest Gas has a Zacks Rank of #3 (Hold). This means that ATO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
ATO currently has a forward P/E ratio of 16.85, while SWX has a forward P/E of 22.24. We also note that ATO has a PEG ratio of 2.41. 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. SWX currently has a PEG ratio of 3.71.
Another notable valuation metric for ATO is its P/B ratio of 1.45. 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, SWX has a P/B of 1.62.
These metrics, and several others, help ATO earn a Value grade of B, while SWX has been given a Value grade of C.
ATO 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 ATO is likely the superior value option right now.
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ATO or SWX: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of Atmos Energy (ATO - Free Report) and Southwest Gas (SWX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Atmos Energy is sporting a Zacks Rank of #2 (Buy), while Southwest Gas has a Zacks Rank of #3 (Hold). This means that ATO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
ATO currently has a forward P/E ratio of 16.85, while SWX has a forward P/E of 22.24. We also note that ATO has a PEG ratio of 2.41. 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. SWX currently has a PEG ratio of 3.71.
Another notable valuation metric for ATO is its P/B ratio of 1.45. 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, SWX has a P/B of 1.62.
These metrics, and several others, help ATO earn a Value grade of B, while SWX has been given a Value grade of C.
ATO 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 ATO is likely the superior value option right now.