Yahoo Finance FTS vs. SO: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Fortis (FTS) and Southern Co. (SO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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.
Fortis and Southern Co. 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 FTS has an improving earnings 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.
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.
FTS currently has a forward P/E ratio of 16.82, while SO has a forward P/E of 19.54. We also note that FTS 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. SO currently has a PEG ratio of 2.81.
Another notable valuation metric for FTS is its P/B ratio of 1.17. 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, SO has a P/B of 2.40.
These metrics, and several others, help FTS earn a Value grade of B, while SO has been given a Value grade of D.
FTS 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 FTS is likely the superior value option right now.
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Fortis (FTS) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
