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NWN vs. OGS: Which Stock Is the Better Value Option?

Investors interested in stocks from the Utility - Gas Distribution sector have probably already heard of Northwest Natural (NWN) and ONE Gas (OGS). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Northwest Natural has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NWN has an improving earnings outlook. 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.

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.

NWN currently has a forward P/E ratio of 17.18, while OGS has a forward P/E of 17.21. We also note that NWN has a PEG ratio of 3.41. 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. OGS currently has a PEG ratio of 3.44.

Another notable valuation metric for NWN 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, OGS has a P/B of 1.53.

Based on these metrics and many more, NWN holds a Value grade of B, while OGS has a Value grade of D.

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


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Northwest Natural Gas Company (NWN): Free Stock Analysis Report
 
ONE Gas, Inc. (OGS): Free Stock Analysis Report
 
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