Investors interested in stocks from the Utility - Electric Power sector have probably already heard of PGE (POR) and IdaCorp (IDA). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, PGE has a Zacks Rank of #2 (Buy), while IdaCorp has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that POR has an improving earnings outlook. But this is only part of the picture for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
POR currently has a forward P/E ratio of 16.92, while IDA has a forward P/E of 18.63. We also note that POR has a PEG ratio of 3.21. 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. IDA currently has a PEG ratio of 7.08.
Another notable valuation metric for POR is its P/B ratio of 1.37. 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, IDA has a P/B of 1.73.
Based on these metrics and many more, POR holds a Value grade of B, while IDA has a Value grade of D.
POR stands above IDA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that POR is the superior value option right now.
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Portland General Electric Company (POR) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
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