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Is SCANA Corporation a Great Stock for Value Investors?

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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn't want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let's put SCANA CorporationSCG stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock's current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, SCANA Corporation has a trailing twelve months PE ratio of 15.59, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.12. While SCANA Corporation's current PE level puts it slightly above its midpoint of 15.25 over the past five years, it stands well below the highs scaled in the past five years, suggesting that it could be a good entry point.

The stock's PE stands marginally above the Zacks classified Utilities sector's trailing twelve months PE ratio, which stands at 15.54. This indicates that the stock's valuation is slightly stretched, as compared to its peers.

Nevertheless, we should also point out that SCANA Corporation has a forward PE ratio (price relative to this year's earnings) of little less - 15.45, so it is fair to say that a slightly more value-oriented path may be ahead for SCANA Corporation stock in the near term too.

P/S Ratio

SCANA Corporation key metric to note is the Price/Sales ratio. This approach compares a given stock's price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, SCANA Corporation has a P/S ratio of about 2.22. This is lower than the S&P 500 average, which comes in at 3.17 right now, indicating that the stock is undervalued from this aspect as well.

Broad Value Outlook

In aggregate, SCANA Corporation currently has a Zacks Value Style Score of 'B', putting it into the top 40% of all stocks we cover from this look. This makes SCANA Corporation a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for SCANA Corporation is just 2.73, a level that is far lower than the industry average of 3.11. The PEG ratio is a modified PE ratio that takes into account the stock's earnings growth rate. Clearly, SCG is a solid choice on the value front from multiple angles.

What About the Stock Overall?

While SCANA Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of 'C' and a Momentum score of 'A'. This gives SCG a Zacks VGM score-or its overarching fundamental grade-of 'B'. (You can read more about the Zacks Style Scores here >> )

Notably, the company's recent earnings estimates have been somewhat encouraging. The current quarter has seen one upward and downward estimate revision each, in the past sixty days, while the full year estimate has seen two upward and no downward revisions in the same time period.

This has had a slightly positive impact on the consensus estimate, as the current quarter consensus estimate has been stable in the past two months, while the full year estimate has climbed 1.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Scana Corporation Price and Consensus

Scana Corporation Price and Consensus | Scana Corporation Quote

However, this somewhat bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term. Nonetheless, the bullish analyst sentiment indicates that the stock's prospects in the near term look good.

Bottom Line

SCANA Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 46% out of over 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the Zacks classified Utility- Electric Power industry has clearly underperformed the broader market, as you can see below:

Hence, investors might wait for broader factors to turn favorable for this company name first, but once that happens, this stock could be a compelling pick.

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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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