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Should Value Investors Buy UGI (UGI) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is UGI (UGI - Free Report) . UGI is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.07. This compares to its industry's average Forward P/E of 15.95. Over the past year, UGI's Forward P/E has been as high as 11.70 and as low as 7.38, with a median of 10.04.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. UGI has a P/S ratio of 1.06. This compares to its industry's average P/S of 1.61.

Finally, investors should note that UGI has a P/CF ratio of 6.08. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.09. Over the past year, UGI's P/CF has been as high as 6.44 and as low as 4.00, with a median of 5.37.

Value investors will likely look at more than just these metrics, but the above data helps show that UGI is likely undervalued currently. And when considering the strength of its earnings outlook, UGI sticks out as one of the market's strongest value stocks.


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