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USDP or UNP: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Transportation - Rail sector might want to consider either USD Partners LP (USDP - Free Report) or Union Pacific (UNP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, USD Partners LP has a Zacks Rank of #2 (Buy), while Union Pacific has a Zacks Rank of #3 (Hold). This means that USDP'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 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 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.

USDP currently has a forward P/E ratio of 7.36, while UNP has a forward P/E of 19.48. We also note that USDP has a PEG ratio of 1.84. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UNP currently has a PEG ratio of 1.95.

Another notable valuation metric for USDP is its P/B ratio of 6.15. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, UNP has a P/B of 11.09.

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

USDP has seen stronger estimate revision activity and sports more attractive valuation metrics than UNP, so it seems like value investors will conclude that USDP is the superior option right now.


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