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SWX vs. OGS: Which Stock Is the Better Value Option?

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Investors interested in Utility - Gas Distribution stocks are likely familiar with Southwest Gas (SWX - Free Report) and ONE Gas (OGS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Southwest Gas has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that SWX likely has seen a stronger improvement to its earnings outlook than OGS has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SWX currently has a forward P/E ratio of 18.41, while OGS has a forward P/E of 22.74. We also note that SWX has a PEG ratio of 4.60. 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. OGS currently has a PEG ratio of 8.34.

Another notable valuation metric for SWX is its P/B ratio of 1.88. 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, OGS has a P/B of 2.01.

These are just a few of the metrics contributing to SWX's Value grade of B and OGS's Value grade of D.

SWX sticks out from OGS in both our Zacks Rank and Style Scores models, so value investors will likely feel that SWX is the better option right now.


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