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SR vs. OGS: Which Stock Should Value Investors Buy Now?

Investors with an interest in Utility - Gas Distribution stocks have likely encountered both Spire (SR) and ONE Gas (OGS). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Spire has a Zacks Rank of #2 (Buy), while ONE Gas has a Zacks Rank of #3 (Hold). This means that SR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

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.

SR currently has a forward P/E ratio of 18.32, while OGS has a forward P/E of 20.15. We also note that SR has a PEG ratio of 3.66. 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. OGS currently has a PEG ratio of 4.03.

Another notable valuation metric for SR is its P/B ratio of 1.42. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OGS has a P/B of 1.80.

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

SR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SR is likely the superior value option right now.


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