PNW vs. IDA: Which Stock Is the Better Value Option?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Pinnacle West (PNW) and IdaCorp (IDA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Pinnacle West has a Zacks Rank of #2 (Buy), while IdaCorp has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that PNW likely has seen a stronger improvement to its earnings outlook than IDA has recently. But this is just one factor that value investors are interested in.
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.
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 18.88, while IDA has a forward P/E of 19.06. We also note that PNW has a PEG ratio of 2.92. 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. IDA currently has a PEG ratio of 5.18.
Another notable valuation metric for PNW is its P/B ratio of 1.47. 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, IDA has a P/B of 1.70.
Based on these metrics and many more, PNW holds a Value grade of B, while IDA has a Value grade of D.
PNW sticks out from IDA in both our Zacks Rank and Style Scores models, so value investors will likely feel that PNW is the better option right now.
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Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
