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Is Huaneng Power (HNP) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Huaneng Power (HNP). HNP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 12.43. This compares to its industry's average Forward P/E of 14.14. Over the last 12 months, HNP's Forward P/E has been as high as 38.40 and as low as 6.58, with a median of 11.04.

Investors should also note that HNP holds a PEG ratio of 0.95. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HNP's industry has an average PEG of 2.28 right now. HNP's PEG has been as high as 2.92 and as low as 0.50, with a median of 0.84, all within the past year.

Another notable valuation metric for HNP is its P/B ratio of 0.66. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. HNP's current P/B looks attractive when compared to its industry's average P/B of 1.47. Over the past 12 months, HNP's P/B has been as high as 0.78 and as low as 0.54, with a median of 0.64.

Value investors will likely look at more than just these metrics, but the above data helps show that Huaneng Power is likely undervalued currently. And when considering the strength of its earnings outlook, HNP sticks out at as one of the market's strongest value stocks.


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