Investors with an interest in Utility - Electric Power stocks have likely encountered both Portland General Electric (POR) and Xcel Energy (XEL). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Portland General Electric has a Zacks Rank of #2 (Buy), while Xcel Energy has a Zacks Rank of #3 (Hold) right now. This means that POR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
POR currently has a forward P/E ratio of 19.03, while XEL has a forward P/E of 20.98. We also note that POR has a PEG ratio of 3.13. 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. XEL currently has a PEG ratio of 3.17.
Another notable valuation metric for POR is its P/B ratio of 1.62. 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, XEL has a P/B of 2.32.
These are just a few of the metrics contributing to POR's Value grade of B and XEL's Value grade of C.
POR has seen stronger estimate revision activity and sports more attractive valuation metrics than XEL, so it seems like value investors will conclude that POR is the superior option right now.
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