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EXC or PNW: Which Is the Better Value Stock Right Now?

Investors interested in Utility - Electric Power stocks are likely familiar with Exelon (EXC) and Pinnacle West (PNW). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Exelon and Pinnacle West are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EXC has an improving earnings outlook. 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.

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.

EXC currently has a forward P/E ratio of 14.25, while PNW has a forward P/E of 18.73. We also note that EXC has a PEG ratio of 2.51. 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. PNW currently has a PEG ratio of 4.19.

Another notable valuation metric for EXC is its P/B ratio of 1.31. 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, PNW has a P/B of 1.82.

These metrics, and several others, help EXC earn a Value grade of A, while PNW has been given a Value grade of C.

EXC has seen stronger estimate revision activity and sports more attractive valuation metrics than PNW, so it seems like value investors will conclude that EXC is the superior 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.


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

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