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MDU or VVC: Which Is the Better Value Stock Right Now?

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Investors interested in Utility - Gas Distribution stocks are likely familiar with MDU Resources (MDU - Free Report) and Vectren . But which of these two stocks presents investors with the better value opportunity right now? Let's 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, MDU Resources has a Zacks Rank of #2 (Buy), while Vectren has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MDU 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

MDU currently has a forward P/E ratio of 16.05, while VVC has a forward P/E of 23.55. We also note that MDU has a PEG ratio of 2.68. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. VVC currently has a PEG ratio of 3.93.

Another notable valuation metric for MDU is its P/B ratio of 1.89. 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.

Based on these metrics and many more, MDU holds a Value grade of B, while VVC has a Value grade of C.

MDU stands above VVC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MDU is the superior value option right now.


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