Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Pampa Energia (PAM) and Southern Co. (SO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Pampa Energia 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 PAM is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
PAM currently has a forward P/E ratio of 3.92, while SO has a forward P/E of 20.30. We also note that PAM has a PEG ratio of 0.19. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SO currently has a PEG ratio of 4.51.
Another notable valuation metric for PAM is its P/B ratio of 0.52. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SO has a P/B of 2.06.
These metrics, and several others, help PAM earn a Value grade of A, while SO has been given a Value grade of C.
PAM sticks out from SO in both our Zacks Rank and Style Scores models, so value investors will likely feel that PAM is the better option right now.
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Pampa Energia S.A. (PAM) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
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