PNM vs. MGEE: Which Stock Is the Better Value Option?
Investors interested in Utility - Electric Power stocks are likely familiar with PNM Resources (PNM) and MGE (MGEE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Currently, PNM Resources has a Zacks Rank of #2 (Buy), while MGE has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PNM is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 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 16.42, while MGEE has a forward P/E of 22.53. We also note that PNM has a PEG ratio of 3.66. 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 4.21.
Another notable valuation metric for PNM is its P/B ratio of 1.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MGEE has a P/B of 2.43.
These are just a few of the metrics contributing to PNM's Value grade of B and MGEE's Value grade of D.
PNM sticks out from MGEE in both our Zacks Rank and Style Scores models, so value investors will likely feel that PNM is the better option right now.
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PNM Resources, Inc. (PNM) : Free Stock Analysis Report
MGE Energy Inc. (MGEE) : Free Stock Analysis Report
