Yahoo Finance PNW or OGE: Which Is the Better Value Stock Right Now?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Pinnacle West (PNW) and OGE Energy (OGE). 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.
Pinnacle West and OGE Energy are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PNW is likely seeing its earnings outlook improve to a greater extent. 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 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.
PNW currently has a forward P/E ratio of 16.17, while OGE has a forward P/E of 17.05. We also note that PNW has a PEG ratio of 2.14. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OGE currently has a PEG ratio of 3.41.
Another notable valuation metric for PNW is its P/B ratio of 1.39. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OGE has a P/B of 1.64.
Based on these metrics and many more, PNW holds a Value grade of B, while OGE has a Value grade of C.
PNW has seen stronger estimate revision activity and sports more attractive valuation metrics than OGE, so it seems like value investors will conclude that PNW is the superior option right now.
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Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
OGE Energy Corporation (OGE) : Free Stock Analysis Report
