Investors looking for stocks in the Transportation - Shipping sector might want to consider either Hoegh LNG (HMLP - Free Report) or Kirby (KEX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Hoegh LNG and Kirby are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
HMLP currently has a forward P/E ratio of 10.77, while KEX has a forward P/E of 29.47. We also note that HMLP has a PEG ratio of 0.75. 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. KEX currently has a PEG ratio of 2.16.
Another notable valuation metric for HMLP is its P/B ratio of 1.61. 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, KEX has a P/B of 1.66.
These are just a few of the metrics contributing to HMLP's Value grade of A and KEX's Value grade of C.
Both HMLP and KEX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HMLP is the superior value option right now.