Investors interested in stocks from the Utility - Electric Power sector have probably already heard of CenterPoint Energy (CNP) and National Grid (NGG). 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.
Currently, CenterPoint Energy has a Zacks Rank of #2 (Buy), while National Grid has a Zacks Rank of #4 (Sell). 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CNP currently has a forward P/E ratio of 14.25, while NGG has a forward P/E of 15.91. We also note that CNP has a PEG ratio of 2.85. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NGG currently has a PEG ratio of 5.85.
Another notable valuation metric for CNP is its P/B ratio of 1.74. 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, NGG has a P/B of 1.85.
Based on these metrics and many more, CNP holds a Value grade of A, while NGG has a Value grade of C.
CNP sticks out from NGG in both our Zacks Rank and Style Scores models, so value investors will likely feel that CNP is the better option right now.
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CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
National Grid Transco, PLC (NGG) : Free Stock Analysis Report
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