Is NRG Energy (NRG) a Great Value Stock Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
NRG Energy (NRG) is a stock many investors are watching right now. NRG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.62, while its industry has an average P/E of 13.88. Over the past 52 weeks, NRG's Forward P/E has been as high as 13.18 and as low as 7.31, with a median of 8.19.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. NRG has a P/S ratio of 1.01. This compares to its industry's average P/S of 2.19.
Value investors will likely look at more than just these metrics, but the above data helps show that NRG Energy is likely undervalued currently. And when considering the strength of its earnings outlook, NRG sticks out at as one of the market's strongest value stocks.
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