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

Investors with an interest in Oil and Gas - Production and Pipelines stocks have likely encountered both MPLX LP (MPLX) and Williams Companies, Inc. (The) (WMB). 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.

Right now, both MPLX LP and Williams Companies, Inc. (The) are sporting a Zacks Rank of # 2 (Buy). 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. But this is just one piece of the puzzle for value investors.

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 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.

MPLX currently has a forward P/E ratio of 10.43, while WMB has a forward P/E of 23.80. We also note that MPLX has a PEG ratio of 2.09. 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. WMB currently has a PEG ratio of 6.92.

Another notable valuation metric for MPLX is its P/B ratio of 3.25. 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, WMB has a P/B of 3.48.

Based on these metrics and many more, MPLX holds a Value grade of B, while WMB has a Value grade of C.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.