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ENB vs. WMB: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Oil and Gas - Production and Pipelines sector have probably already heard of Enbridge (ENB - Free Report) and Williams Companies, Inc. The (WMB - Free Report) . 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Enbridge and Williams Companies, Inc. The are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ENB has an improving earnings outlook. 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 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.

ENB currently has a forward P/E ratio of 15.90, while WMB has a forward P/E of 18.31. We also note that ENB has a PEG ratio of 1.65. 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. WMB currently has a PEG ratio of 3.66.

Another notable valuation metric for ENB is its P/B ratio of 1.29. 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, WMB has a P/B of 1.58.

These metrics, and several others, help ENB earn a Value grade of B, while WMB has been given a Value grade of C.

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


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Williams Companies, Inc. (The) (WMB) - free report >>

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