PAM vs. WEC: Which Stock Is the Better Value Option?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Pampa Energia (PAM) and WEC Energy Group (WEC). 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.
Right now, Pampa Energia is sporting a Zacks Rank of #1 (Strong Buy), while WEC Energy Group has a Zacks Rank of #3 (Hold). This means that PAM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PAM currently has a forward P/E ratio of 4.76, while WEC has a forward P/E of 17.49. We also note that PAM has a PEG ratio of 0.32. 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. WEC currently has a PEG ratio of 3.04.
Another notable valuation metric for PAM is its P/B ratio of 0.75. 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, WEC has a P/B of 2.12.
These are just a few of the metrics contributing to PAM's Value grade of A and WEC's Value grade of C.
PAM stands above WEC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PAM is the superior value option right now.
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Pampa Energia S.A. (PAM) : Free Stock Analysis Report
WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
