Investors with an interest in Utility - Electric Power stocks have likely encountered both Avista (AVA) and Consolidated Edison (ED). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Avista is sporting a Zacks Rank of #2 (Buy), while Consolidated Edison has a Zacks Rank of #3 (Hold). This means that AVA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
AVA currently has a forward P/E ratio of 15.99, while ED has a forward P/E of 20.25. We also note that AVA has a PEG ratio of 3.32. 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. ED currently has a PEG ratio of 3.63.
Another notable valuation metric for AVA is its P/B ratio of 1.19. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ED has a P/B of 1.72.
These metrics, and several others, help AVA earn a Value grade of B, while ED has been given a Value grade of C.
AVA 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 AVA is likely the superior value option right now.
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Today, See These 5 Potential Home Runs >>Avista Corporation (AVA) : Free Stock Analysis Report
Consolidated Edison Inc (ED) : Free Stock Analysis Report
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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.
