KMI or PBA: Which Is the Better Value Stock Right Now?
Investors with an interest in Oil and Gas - Production and Pipelines stocks have likely encountered both Kinder Morgan (KMI) and Pembina Pipeline (PBA). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Kinder Morgan has a Zacks Rank of #2 (Buy), while Pembina Pipeline has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KMI is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
KMI currently has a forward P/E ratio of 14.45, while PBA has a forward P/E of 15.54. We also note that KMI has a PEG ratio of 4.82. 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. PBA currently has a PEG ratio of 5.18.
Another notable valuation metric for KMI is its P/B ratio of 1.21. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PBA has a P/B of 1.90.
Based on these metrics and many more, KMI holds a Value grade of B, while PBA has a Value grade of C.
KMI sticks out from PBA in both our Zacks Rank and Style Scores models, so value investors will likely feel that KMI is the better option right now.
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Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
Pembina Pipeline Corp. (PBA) : Free Stock Analysis Report
