Yahoo Finance NRG or PEG: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Utility - Electric Power sector might want to consider either NRG Energy (NRG) or PSEG (PEG). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, NRG Energy is sporting a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that NRG likely has seen a stronger improvement to its earnings outlook than PEG has recently. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
NRG currently has a forward P/E ratio of 6.60, while PEG has a forward P/E of 17.74. We also note that NRG has a PEG ratio of 6. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PEG currently has a PEG ratio of 7.52.
Another notable valuation metric for NRG is its P/B ratio of 2. 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, PEG has a P/B of 2.29.
Based on these metrics and many more, NRG holds a Value grade of B, while PEG has a Value grade of F.
NRG 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 NRG is likely the superior value option right now.
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NRG Energy, Inc. (NRG) : Free Stock Analysis Report
Public Service Enterprise Group Incorporated (PEG) : Free Stock Analysis Report
