CNP or SO: Which Is the Better Value Stock Right Now?
Investors with an interest in Utility - Electric Power stocks have likely encountered both CenterPoint Energy (CNP) and Southern Co. (SO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Currently, both CenterPoint Energy and Southern Co. are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle 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.
CNP currently has a forward P/E ratio of 18.44, while SO has a forward P/E of 18.45. We also note that CNP has a PEG ratio of 2.45. 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. SO currently has a PEG ratio of 4.61.
Another notable valuation metric for CNP is its P/B ratio of 1.81. 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, SO has a P/B of 2.09.
These metrics, and several others, help CNP earn a Value grade of B, while SO has been given a Value grade of C.
Both CNP and SO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CNP is 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
