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MPLX vs. WMB: Which Stock Is the Better Value Option?

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Investors with an interest in Oil and Gas - Production and Pipelines stocks have likely encountered both MPLX LP (MPLX - Free Report) and Williams Companies, Inc. (The) (WMB - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Both MPLX LP and Williams Companies, Inc. (The) have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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 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.

MPLX currently has a forward P/E ratio of 10.31, while WMB has a forward P/E of 29.58. We also note that MPLX has a PEG ratio of 1.21. 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. WMB currently has a PEG ratio of 6.33.

Another notable valuation metric for MPLX is its P/B ratio of 3.31. 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, WMB has a P/B of 4.27.

These metrics, and several others, help MPLX earn a Value grade of B, while WMB has been given a Value grade of D.

Both MPLX and WMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MPLX is the superior value option right now.


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