Investors interested in stocks from the Utility - Electric Power sector have probably already heard of PGE (POR) and Unitil (UTL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
PGE and Unitil are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that POR is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
POR currently has a forward P/E ratio of 21.49, while UTL has a forward P/E of 24.90. We also note that POR has a PEG ratio of 4.39. 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. UTL currently has a PEG ratio of 6.26.
Another notable valuation metric for POR is its P/B ratio of 1.84. 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, UTL has a P/B of 2.28.
These metrics, and several others, help POR earn a Value grade of B, while UTL has been given a Value grade of C.
POR has seen stronger estimate revision activity and sports more attractive valuation metrics than UTL, so it seems like value investors will conclude that POR is the superior option right now.
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