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SWX vs. NJR: Which Stock Is the Better Value Option?

Investors with an interest in Utility - Gas Distribution stocks have likely encountered both Southwest Gas (SWX) and New Jersey Resources (NJR). 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Southwest Gas has a Zacks Rank of #2 (Buy), while New Jersey Resources 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 SWX 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

SWX currently has a forward P/E ratio of 17.57, while NJR has a forward P/E of 22.92. We also note that SWX has a PEG ratio of 3.51. 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. NJR currently has a PEG ratio of 3.82.

Another notable valuation metric for SWX is its P/B ratio of 1.52. 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, NJR has a P/B of 2.43.

These are just a few of the metrics contributing to SWX's Value grade of B and NJR's Value grade of C.

SWX sticks out from NJR in both our Zacks Rank and Style Scores models, so value investors will likely feel that SWX is the better option right now.


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Southwest Gas Corporation (SWX): Free Stock Analysis Report
 
NewJersey Resources Corporation (NJR): Free Stock Analysis Report
 
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