Yahoo Finance PNM vs. PEG: Which Stock Should Value Investors Buy Now?
Investors with an interest in Utility - Electric Power stocks have likely encountered both PNM Resources (PNM) and PSEG (PEG). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
PNM Resources has a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PNM is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
PNM currently has a forward P/E ratio of 14.23, while PEG has a forward P/E of 20.35. We also note that PNM has a PEG ratio of 3.10. 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. PEG currently has a PEG ratio of 3.26.
Another notable valuation metric for PNM is its P/B ratio of 1.44. 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 2.36.
These metrics, and several others, help PNM earn a Value grade of B, while PEG has been given a Value grade of D.
PNM 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 PNM is likely the superior value option right now.
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PNM Resources, Inc. (PNM) : Free Stock Analysis Report
Public Service Enterprise Group Incorporated (PEG) : Free Stock Analysis Report
