Investors with an interest in Utility - Electric Power stocks have likely encountered both PG&E (PCG) and Portland General Electric (POR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, PG&E is sporting a Zacks Rank of #2 (Buy), while Portland General Electric has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PCG has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
PCG currently has a forward P/E ratio of 10.42, while POR has a forward P/E of 15.49. We also note that PCG has a PEG ratio of 0.66. 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. POR currently has a PEG ratio of 2.20.
Another notable valuation metric for PCG is its P/B ratio of 1.44. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, POR has a P/B of 1.48.
These metrics, and several others, help PCG earn a Value grade of A, while POR has been given a Value grade of C.
PCG 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 PCG is likely the superior value option right now.
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Pacific Gas & Electric Co. (PCG): Free Stock Analysis Report
Portland General Electric Company (POR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).