SO or IDA: Which Is the Better Value Stock Right Now?
Investors interested in Utility - Electric Power stocks are likely familiar with Southern Co. (SO) and IdaCorp (IDA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Southern Co. has a Zacks Rank of #2 (Buy), while IdaCorp has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SO likely has seen a stronger improvement to its earnings outlook than IDA has recently. 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.
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.
SO currently has a forward P/E ratio of 14.77, while IDA has a forward P/E of 23.49. We also note that SO has a PEG ratio of 3.28. 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. IDA currently has a PEG ratio of 8.45.
Another notable valuation metric for SO is its P/B ratio of 1.67. 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, IDA has a P/B of 2.20.
These metrics, and several others, help SO earn a Value grade of B, while IDA has been given a Value grade of D.
SO stands above IDA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SO is the superior value option right now.
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