Yahoo Finance NRG vs. CNP: Which Stock Is the Better Value Option?
Investors with an interest in Utility - Electric Power stocks have likely encountered both NRG Energy (NRG) and CenterPoint Energy (CNP). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
NRG Energy has a Zacks Rank of #1 (Strong Buy), while CenterPoint Energy has a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NRG has an improving earnings outlook. 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 6.35, while CNP has a forward P/E of 20.40. We also note that NRG has a PEG ratio of 0.53. 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. CNP currently has a PEG ratio of 5.79.
Another notable valuation metric for NRG is its P/B ratio of 1.45. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CNP has a P/B of 2.08.
These are just a few of the metrics contributing to NRG's Value grade of A and CNP's Value grade of C.
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
CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
