Investors looking for stocks in the Utility - Electric Power sector might want to consider either Huaneng Power (HNP) or IdaCorp (IDA). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Huaneng Power has a Zacks Rank of #2 (Buy), while IdaCorp 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 HNP has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
HNP currently has a forward P/E ratio of 8.91, while IDA has a forward P/E of 20.32. We also note that HNP has a PEG ratio of 0.68. 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. IDA currently has a PEG ratio of 7.72.
Another notable valuation metric for HNP is its P/B ratio of 0.34. 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, IDA has a P/B of 1.89.
These metrics, and several others, help HNP earn a Value grade of A, while IDA has been given a Value grade of D.
HNP has seen stronger estimate revision activity and sports more attractive valuation metrics than IDA, so it seems like value investors will conclude that HNP is the superior option right now.
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Huaneng Power International, Inc. (HNP) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
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