PNM vs. PEG: Which Stock Is the Better Value Option?
Investors looking for stocks in the Utility - Electric Power sector might want to consider either PNM Resources (PNM) or PSEG (PEG). 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.
PNM Resources and PSEG 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 just one factor that value investors are interested in.
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 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 17.24, while PEG has a forward P/E of 18.01. We also note that PNM has a PEG ratio of 4.09. 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. PEG currently has a PEG ratio of 4.16.
Another notable valuation metric for PNM is its P/B ratio of 1.77. 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, PEG has a P/B of 2.10.
These metrics, and several others, help PNM earn a Value grade of B, while PEG has been given a Value grade of C.
PNM has seen stronger estimate revision activity and sports more attractive valuation metrics than PEG, so it seems like value investors will conclude that PNM is the superior option right now.
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PNM Resources, Inc. (PNM) : Free Stock Analysis Report
Public Service Enterprise Group Incorporated (PEG) : Free Stock Analysis Report
