HNP or SO: Which Is the Better Value Stock Right Now?
Investors interested in Utility - Electric Power stocks are likely familiar with Huaneng Power (HNP) and Southern Co. (SO). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Huaneng Power and Southern Co. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HNP is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
HNP currently has a forward P/E ratio of 8.24, while SO has a forward P/E of 17.75. We also note that HNP has a PEG ratio of 0.63. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SO currently has a PEG ratio of 4.44.
Another notable valuation metric for HNP is its P/B ratio of 0.39. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SO has a P/B of 1.85.
These metrics, and several others, help HNP earn a Value grade of A, while SO has been given a Value grade of C.
HNP stands above SO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HNP is the superior value option right now.
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Huaneng Power International, Inc. (HNP) : Free Stock Analysis Report
Southern Company The (SO) : Free Stock Analysis Report
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