PNM or MGEE: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of PNM Resources (PNM) and MGE (MGEE). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
PNM Resources and MGE are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PNM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PNM currently has a forward P/E ratio of 16.49, while MGEE has a forward P/E of 22.13. We also note that PNM has a PEG ratio of 3.67. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MGEE currently has a PEG ratio of 4.14.
Another notable valuation metric for PNM is its P/B ratio of 1.66. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MGEE has a P/B of 2.39.
These are just a few of the metrics contributing to PNM's Value grade of B and MGEE's Value grade of D.
PNM stands above MGEE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PNM is the superior value option right now.
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PNM Resources, Inc. (PNM) : Free Stock Analysis Report
MGE Energy Inc. (MGEE) : Free Stock Analysis Report
