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USDP vs. UNP: Which Stock Is the Better Value Option?

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Investors interested in Transportation - Rail stocks are likely familiar with USD Partners LP (USDP - Free Report) and Union Pacific (UNP - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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, USD Partners LP is sporting a Zacks Rank of #2 (Buy), while Union Pacific has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that USDP likely has seen a stronger improvement to its earnings outlook than UNP has recently. But this is just one factor that value investors are interested in.

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.

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.

USDP currently has a forward P/E ratio of 7, while UNP has a forward P/E of 18.22. We also note that USDP has a PEG ratio of 1.75. 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. UNP currently has a PEG ratio of 1.82.

Another notable valuation metric for USDP is its P/B ratio of 5.85. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, UNP has a P/B of 11.10.

Based on these metrics and many more, USDP holds a Value grade of A, while UNP has a Value grade of D.

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


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