EBR vs. PNW: Which Stock Is the Better Value Option?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Eletrobras (EBR) and Pinnacle West (PNW). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Eletrobras is sporting a Zacks Rank of #2 (Buy), while Pinnacle West has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EBR is likely seeing its earnings outlook improve to a greater extent. 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.
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.
EBR currently has a forward P/E ratio of 8.72, while PNW has a forward P/E of 20.29. We also note that EBR has a PEG ratio of 0.76. 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. PNW currently has a PEG ratio of 3.32.
Another notable valuation metric for EBR is its P/B ratio of 0.87. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PNW has a P/B of 1.51.
These metrics, and several others, help EBR earn a Value grade of B, while PNW has been given a Value grade of C.
EBR has seen stronger estimate revision activity and sports more attractive valuation metrics than PNW, so it seems like value investors will conclude that EBR is the superior option right now.
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Centrais El?tricas Brasileiras SA (EBR) : Free Stock Analysis Report
Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
