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AMRC or ORA: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Alternative Energy - Other sector might want to consider either Ameresco (AMRC) or Ormat Technologies (ORA). 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Ameresco and Ormat Technologies are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AMRC likely has seen a stronger improvement to its earnings outlook than ORA has recently. But this is only part of the picture for value investors.

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.

AMRC currently has a forward P/E ratio of 20.07, while ORA has a forward P/E of 33.49. We also note that AMRC has a PEG ratio of 1.15. 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. ORA currently has a PEG ratio of 3.04.

Another notable valuation metric for AMRC is its P/B ratio of 1.99. 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, ORA has a P/B of 2.10.

These are just a few of the metrics contributing to AMRC's Value grade of A and ORA's Value grade of D.

AMRC stands above ORA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMRC is the superior value option right now.


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