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

Investors with an interest in Utility - Gas Distribution stocks have likely encountered both Southwest Gas (SWX) 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Southwest Gas is sporting a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SWX is likely seeing its earnings outlook improve to a greater extent. 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.

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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.

SWX currently has a forward P/E ratio of 18.43, while OGS has a forward P/E of 21.28. We also note that SWX has a PEG ratio of 3.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. OGS currently has a PEG ratio of 3.87.

Another notable valuation metric for SWX is its P/B ratio of 1.49. 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, OGS has a P/B of 1.82.

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

SWX stands above OGS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SWX is the superior value option right now.


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Southwest Gas Corporation (SWX) : Free Stock Analysis Report
 
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
 
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