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

Investors interested in stocks from the Transportation – Shipping sector have probably already heard of Hoegh LNG (HMLP) and Kirby (KEX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Hoegh LNG has a Zacks Rank of #2 (Buy), while Kirby has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that HMLP likely has seen a stronger improvement to its earnings outlook than KEX has recently. But this is just one piece of the puzzle 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.

Our Value category grades stocks based on a number of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

HMLP currently has a forward P/E ratio of 11.48, while KEX has a forward P/E of 31.28. We also note that HMLP has a PEG ratio of 0.85. 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. KEX currently has a PEG ratio of 2.29.

Another notable valuation metric for HMLP is its P/B ratio of 1.60. 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, KEX has a P/B of 1.77.

These are just a few of the metrics contributing to HMLP's Value grade of B and KEX's 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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