CNP or SO: Which Is the Better Value Stock Right Now?
Investors interested in Utility - Electric Power stocks are likely familiar with CenterPoint Energy (CNP) and Southern Co. (SO). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
CenterPoint Energy has a Zacks Rank of #2 (Buy), while Southern Co. has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CNP has an improving earnings outlook. However, value investors will care about much more than just this.
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 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.
CNP currently has a forward P/E ratio of 18.44, while SO has a forward P/E of 18.65. We also note that CNP has a PEG ratio of 2.45. 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. SO currently has a PEG ratio of 4.66.
Another notable valuation metric for CNP is its P/B ratio of 1.82. 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, SO has a P/B of 2.11.
These are just a few of the metrics contributing to CNP's Value grade of B and SO's Value grade of D.
CNP 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 CNP is likely the superior value option right now.
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CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
