PNW or IDA: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Pinnacle West (PNW) and IdaCorp (IDA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Pinnacle West is sporting a Zacks Rank of #2 (Buy), while IdaCorp has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PNW has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
PNW currently has a forward P/E ratio of 20.11, while IDA has a forward P/E of 20.48. We also note that PNW has a PEG ratio of 3.18. 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. IDA currently has a PEG ratio of 5.57.
Another notable valuation metric for PNW is its P/B ratio of 1.51. 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, IDA has a P/B of 1.86.
These metrics, and several others, help PNW earn a Value grade of B, while IDA has been given a Value grade of D.
PNW is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PNW is likely the superior value option right now.
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Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
