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KMI vs. PBA: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Oil and Gas - Production and Pipelines sector might want to consider either Kinder Morgan (KMI - Free Report) or Pembina Pipeline (PBA - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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, Kinder Morgan is sporting a Zacks Rank of #2 (Buy), while Pembina Pipeline has a Zacks Rank of #4 (Sell). This means that KMI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

KMI currently has a forward P/E ratio of 14.42, while PBA has a forward P/E of 16.03. We also note that KMI has a PEG ratio of 4.81. 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. PBA currently has a PEG ratio of 5.34.

Another notable valuation metric for KMI is its P/B ratio of 1.23. 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, PBA has a P/B of 2.12.

These are just a few of the metrics contributing to KMI's Value grade of B and PBA's Value grade of C.

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


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Kinder Morgan, Inc. (KMI) - free report >>

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