PNM vs. MGEE: Which Stock Should Value Investors Buy 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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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, PNM Resources is sporting a Zacks Rank of #2 (Buy), while MGE has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that PNM likely has seen a stronger improvement to its earnings outlook than MGEE has recently. However, value investors will care about much more than just this.
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.
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.
PNM currently has a forward P/E ratio of 15.64, while MGEE has a forward P/E of 20.92. We also note that PNM has a PEG ratio of 3.48. 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. MGEE currently has a PEG ratio of 3.91.
Another notable valuation metric for PNM is its P/B ratio of 1.60. 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, MGEE has a P/B of 2.32.
These metrics, and several others, help PNM earn a Value grade of B, while MGEE has been given a 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
