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UGP or WMB: Which Is the Better Value Stock Right Now?

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Investors interested in Oil and Gas - Production and Pipelines stocks are likely familiar with Ultrapar Participacoes S.A. (UGP - Free Report) and Williams Companies, Inc. (The) (WMB - 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.

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

Currently, Ultrapar Participacoes S.A. has a Zacks Rank of #1 (Strong Buy), while Williams Companies, Inc. (The) has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UGP likely has seen a stronger improvement to its earnings outlook than WMB has recently. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

UGP currently has a forward P/E ratio of 17.44, while WMB has a forward P/E of 21.38. We also note that UGP has a PEG ratio of 3.48. 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. WMB currently has a PEG ratio of 6.11.

Another notable valuation metric for UGP is its P/B ratio of 2.21. 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, WMB has a P/B of 3.22.

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

UGP is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that UGP is likely the superior value option right now.


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

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