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UGI vs. VVC: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of UGI (UGI - Free Report) and Vectren . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

UGI and Vectren are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UGI is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

UGI currently has a forward P/E ratio of 18.35, while VVC has a forward P/E of 24.93. We also note that UGI has a PEG ratio of 2.29. 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. VVC currently has a PEG ratio of 3.56.

Another notable valuation metric for UGI is its P/B ratio of 2.19. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, VVC has a P/B of 3.19.

These metrics, and several others, help UGI earn a Value grade of B, while VVC has been given a Value grade of C.

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


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