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HMLP vs. KEX: Which Stock Is the Better Value Option?

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Investors with an interest in Transportation - Shipping stocks have likely encountered both Hoegh LNG (HMLP - Free Report) and Kirby (KEX). 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.

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

Hoegh LNG has a Zacks Rank of #2 (Buy), while Kirby has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HMLP is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HMLP currently has a forward P/E ratio of 5.74, while KEX has a forward P/E of 19.31. We also note that HMLP has a PEG ratio of 0.67. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. KEX currently has a PEG ratio of 2.33.

Another notable valuation metric for HMLP is its P/B ratio of 0.83. 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 0.85.

These metrics, and several others, help HMLP earn a Value grade of A, while KEX has been given a Value grade of D.

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


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