Investors interested in Utility - Electric Power stocks are likely familiar with Evergy Inc (EVRG) and Iberdrola S.A. (IBDRY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, both Evergy Inc and Iberdrola S.A. are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
EVRG currently has a forward P/E ratio of 14, while IBDRY has a forward P/E of 16.30. We also note that EVRG has a PEG ratio of 2.80. 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. IBDRY currently has a PEG ratio of 3.04.
Another notable valuation metric for EVRG is its P/B ratio of 1.28. 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, IBDRY has a P/B of 1.31.
These are just a few of the metrics contributing to EVRG's Value grade of B and IBDRY's Value grade of C.
Both EVRG and IBDRY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EVRG 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.
